SMALLER STATES' ALIGNMENT CHOICES:

A COMPARATIVE STUDY OF MALAYSIA AND SINGAPORE'S

HEDGING BEHAVIOR IN THE FACE OF A RISING CHINA

by
Cheng-Chwee Kuik

A dissertation submitted to Johns Hopkins University in conformity with

the requirements for the degree of Doctor of Philosophy

Baltimore, Maryland
June 2010

©2010 Cheng-Chwee Kuik

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 ABSTRACT

This is a comparative study about smaller states' alignment choices in the face

of a rising and proximate power. Specifically, it adopts the approach of structured,

focused comparison of cases, examining how and why Malaysia and Singapore have

responded to a rising China the way they have. The study indicates that Malaysia and

Singapore's China policies share four basic features: economically, a pragmatic

approach to maximize commercial benefits; diplomatically, an engagement policy to

integrate China into the ASEAN-based regional institutions; politically, a dominance-

denial position to prevent Beijing from evolving into an unchecked hegemon; and

militarily, an indirect-balancing stance to prepare for a possible scenario of failed

engagement. Despite these similarities, however, the two countries' policies are

critically different in one important aspect. That is, while Malaysia has demonstrated

a greater readiness to accommodate and utilize the growing Chinese power as a force

to pursue its own interests, Singapore - due to its own domestic and geopolitical

calculations - has rejected such a limited-bandwagoning approach.

These findings highlight that smaller states often do not have to choose

between balancing and bandwagoning; rather, under the conditions of high-

uncertainties and high-stakes, smaller states tend to exhibit different degrees of

"hedging" behavior, which, in essence, is a two-pronged approach of maximizing

economic and diplomatic returns when things are fine, while simultaneously

preparing for strategic contingency in order to mitigate the long-range risks

surrounding the rise of a big power.

That the two similarly-situated states have demonstrated dissimilar degrees of

hedging behavior further suggests that, while the structural pressures amid the shifting

distribution of power do compel both countries to opt for hedging, it is the dissimilar

ii
domestic factors that have driven them to hedge differently. These findings lead us to

argue that, the substance of smaller states' reactions vis-a-vis a rising power is not

determined by their concerns over the growing power gap per se; rather, it is a

function of domestic legitimation through which the ruling elites seek to capitalize on

the dynamics of the rising power for the ultimate goal ofjustifying their own political

authority at home.

Advisor: Karl D. Jackson, Ph.D.

C.V. Starr Distinguished Professor of Southeast Asia Studies
Director, Asian Studies; Director of Southeast Asian Studies
The Paul H. Nitze School of Advanced International Studies
(SAIS), Johns Hopkins University

Second Reader: David M. Lampton, Ph.D.

George and Sadie Hyman Professor of China Studies
Dean of Faculty; Director of the China Studies Program
The Paul H. Nitze School of Advanced International Studies
(SAIS), Johns Hopkins University

Committee Chair: Francis Fukuyama, Ph.D.

Bernard L. Schwartz Professor of International Political
Economy; Director, International Development Program
The Paul H. Nitze School of Advanced International Studies
(SAIS), Johns Hopkins University

Committee Member: Benjamin Reilly, Ph.D.

Visiting Professor, Southeast Asian Studies, SAIS
Professor of Political Science, Crawford School of Economics
and Government, Australian National University (ANU);
Director, Centre for Democratic Institutions (CDI), ANU

External Reader: Marvin C. Ott, Ph.D.

Professor of National Security Policy
National War College
National Defense University

iii
For Gek-Hong, Jie-Yi, and Jie-En

iv
 ACKNOWLEDGMENTS

This study would not have been possible without the help, guidance, and

support of many individuals and institutions. While it is impossible to name every

single person and organization, thanks must go to those who have shaped my view of

world politics, and those who have assisted me in overcoming various hurdles at

different stages of the study.

I am forever indebted to Professor Zakaria Haji Ahmad, my mentor at the

National University of Malaysia (UKM) and now colleague and friend, for taking me

into the academic world and for providing guiding lights along my journey as a

student of politics. I am also appreciative of my teachers at the University of St

Andrews, Scotland - especially Professors Nick Rengger, Mark Imber, and William

Walker - for giving me a grounding in International Relations theories. Professor

Bridget Welsh played an important role in introducing me to Professor Karl Jackson,

my would-be advisor at SAIS, and in offering me support as a teacher and as a friend

during the early stage of my SAIS years in Washington, DC.

At SAIS, I have benefited greatly by the rigorous academic training provided

by the School's distinguished and dedicated faculty. I am especially grateful to three

of the most intellectually inspiring and personally caring teachers I have ever had -

Professors Karl Jackson, David Lampton, and Francis Fukuyama - under whom I

took Comprehensive Examinations in the fields of Southeast Asia Studies, China

Studies, and Comparative Politics, respectively. I had the great fortune of having all

three of them in my dissertation committee from the beginning. It was during the

many rounds of discussions with each of them at the formative stage of my research

that I slowly transformed a vague idea into a more concrete proposal, which guided

my subsequent fieldwork and writings. My greatest debt is to Professor Jackson, who

v
has been a constant source of insight, motivation, and encouragement to me. His

critical thinking and penetrating questions have always pushed me to think harder and

express my thought in a more precise way. The conceptualization and

operationalization of the term "hedging" as presented in Chapters 3 and 4 is very

much the product of an extended process of thinking, rethinking, writing, and

rewriting under his supervision and guidance. Professor Lampton has been very

supportive from day one in encouraging me to research on China's relations with its

neighboring countries, a topic he himself has written in his 2008 book, from which I

have learnt a great deal. Both his books and his classes had a profound influence on

my understanding of China. His thoughtful suggestions and comments during the

consultation sessions guided me to pay more attention on the larger dynamics of the

asymmetrical power relations underpinning Southeast Asia-China interactions.

Professor Fukuyama's insights and feedback on the earlier drafts played a big part in

leading me to simplify and reformulate my theoretical framework. They led me to

focus on illuminating the conditions and limitations of the mainstream Neorealist

model in explicating smaller states' alignment decisions, and to focus on how and

why the Domestic Legitimation Model discussed in Chapter 4 may help to fill the

gap. I thank him and Professor Kent Calder for giving me the opportunity to

contribute a chapter in their 2008 edited book East Asian Multilateralism. In addition,

I would also like to thank Professor Marvin Ott of NDU and Professor Benjamin

Reilly of ANU. They joined my committee only lately, but I am appreciative of their

suggestions and contributions, which are helpful in the final revision of the

dissertation. Needless to say, I alone am solely responsible for the arguments and any

errors herein.

In the course of writing this dissertation, I have also benefited greatly from the

discussions and conversations with the following teachers and colleagues: Professors

vi
Wang Gungwu, Gerald Houseman, the late Chandran Jeshurun, Lee Poh Ping, Tang

Siew Mun, Hari Singh, Serene Hung, Goh Muipong, Prasanna Weerawardane, Ong

Kian Ming, Ian Storey, Johan Saravanamuttu, Lee Kam Hing, Heng Pek Koon, Nor

Azizan Idris, Sadik Gany, Ilango Karuppannan, Cheah Choong Kit, Stephen Leong,

Steven Wong, Leander Seah, and Bronson Percival. My appreciation also goes to the

various officials in Kuala Lumpur, Singapore, Washington, and Beijing who took

time out of their busy schedules to be interviewed.

Various version of the arguments developed in this dissertation were presented

at the SHAPS Graduate Student Conference, University of Hawaii in Honolulu

(March 2007), the 5th International Convention of Asia Scholars in Kuala Lumpur

(August 2007), the Lee Kong Chian Research Fellowship Seminar at the National

Library Board, Singapore (October 2007), the East Asian Institute Seminar Series at

the National University of Singapore (November 2007), the IDFR-MIAF Joint Round

Table on "Reflections on Malaysian Foreign Policy" in Kuala Lumpur (May 2008),

and the ISEAS Michael Leifer Award and Public Seminar in Singapore (February

2010). I thank the participants at these meetings for their comments and suggestions.

I am grateful to the following institutions and programs for their generous

support, without which I would not have been able to pursue my studies at SAIS and

complete my dissertation: the Fulbright Graduate Study Scholarship, the UKM

Faculty Study Leave Award, the SAIS Ph.D. Student Fellowship, the Lee Kong Chian

Research Fellowship, the William and Marie-Daniele Zartman Fellowship, and the

Chiang Ching-kuo Foundation for International Scholarly Exchange. Thanks are also

due to the librarians and staff at UKM Tun Seri Lanang Library, the Malaysian

Institute of Diplomacy and Foreign Relations Library, the Institute of Strategic and

International Studies Library in Kuala Lumpur, the Lee Kong Chian Reference

Library and the Institute of Southeast Asian Studies Library in Singapore, as well as
the SAIS Mason Library and the Library of Congress in Washington, DC.

My heartfelt thanks also go to my friends and fellow classmates, for their

friendship, support, and laughter throughout this journey. Jim and Joanie Alison,

Chang Kian Seng and his family, Jessica Gonzalez, Laura Jones, Xiaoping Wang,

Alex Lok, and Selina Ho all provided fond memories of my stays in Alexandria,

Friendship Heights, Arlington, and Dupont Circle. For fellow graduate students and

friends whom I have made during my SAIS years - Ellen Psychas, Bo Kong, Alisher

Khamidov, Qi Zhou, Sara Konoe, Hong Liu, Fazurin Jamaludin, Nurul Izzah Anwar,

Sai Ma, Prawet Jantharat, Zhaojin Ji, Tabitha Mallory, Amanda Douglas, Alexius

Chua, Donald Low, Bo Bo Nge, Phu Huynh, Ruangkhao Ryce Chanchai and others -

I sincerely thank them for their support and companionship. Back home, my

colleagues at UKM, along with my long-time friends Peter Chee, Chee Keong, Chee

Yong, Ai Hua, Bee Lean, Chun Heng, Keen Lee, Beng Wooi, Hock Peng and their

families have all given me warm support over the years. I thank them all.

Finally, this dissertation would simply be impossible without the love,

patience, and unconditional support from my family. I thank my parents and my

siblings for believing in me and supporting me during the rough times. My eldest

brother Cheng-Kang is the most caring and supportive sibling one could ever have.

Last but not least, I thank my wife Gek-Hong, for her love, understanding, and

sacrifice throughout my academic journey. She was sadly diagnosed with cancer in

September 2008, when I was halfway through my dissertation writing. Even as she

battles this dreaded disease, she has continued to place her faith in me and my project.

It was because of her faith and our love for our children - daughter Jie-Yi and son Jie-

En - that I was able to complete my dissertation during that turbulent phase in our

life. I dedicate this work to three of them.

 TABLE OF CONTENTS

Abstract ii
Acknowledgment v
List of Illustrations x
Abbreviations xi

INTRODUCTION

Chapter 1 Smaller States and the Problems of Power Asymmetry in

International Politics 1

THEORETICAL AND CONCEPTUAL FRAMEWORK

Chapter 2 Assessing Smaller States' Policy Options 40

Chapter 3 Theorizing Smaller States' Alignment Choices:

Balancing, Bandwagoning, and "Hedging" 92

Chapter 4 Research Design 132

HISTORY: THE ORIGINS OF HEDGING

Chapter 5 Malaysia and Singapore's Alignment Choices in the

Shadow of "Red China", 1945-1970 165

Chapter 6 Malaysia and Singapore's Alignment Choices in the

Face of Changing Regional Realities, 1971-1989 204

CASES: THE ESSENCE OF HEDGING

Chapter 7 Malaysia's China Policy, 1990-2010 252

Chapter 8 Singapore's China Policy, 1990-2010 304

CONCLUSION: A RETURN TO THEORY

Chapter 9 Explaining Smaller States' Alignment Choice in the Face of

a Rising Power 341

Bibliography 360

Curriculum Vitae 391

ix
 ILLUSTRATIONS

List of Tables

1.1 Key Defining Variables of "Smaller States" and "Big Powers" 22

4.1 Smaller States' Policy Options in Response to Power Asymmetry 141
4.2 ASEAN States Responses to the Re-emerging China 141
7.1 High-level Visits between Malaysia and China, 1989-1996 279

List of Figures

1.1 Smaller States'Trinity of Risks 37

2.1 The Trinity of Risks and the Smaller States' Policy Options 91
3.1 The Power Rejection-Power Acceptance Spectrum 109
3.2 Measuring Responses to Power Ascendancy 117
3.3 Stakes vs. Uncertainties Matrix 124
4.1 The Domestic Legitimation (DL) Model 153

x
 ABBREVIATIONS

ABIM Angkatan Belia Islam Malaysia (Malaysian Islamic

Youth
Movement)
ACD Asian Cooperation Dialogue
ACFTA ASEAN-China Free Trade Area
AFTA ASEAN Free Trade Area
AMDA Anglo-Malayan Defence Agreement
AMM ASEAN Ministerial Meeting
ANZUK Australia, New Zealand, and the United Kingdom
APEC Asia-Pacific Economic Cooperation
APT ASEAN Plus Three
ARF ASEAN Regional Forum
ARF-SOM ARF Senior Officials Meeting
ASA Association of Southeast Asia
ASEAN Association of Southeast Asian Nations
ASEAN-PMC ASEAN Post-Ministerial Conferences
ASEAN-SOM ASEAN Senior Officials Meeting
ASEM Asia-Europe Meeting
BFSU Beijing Foreign Studies University
BN Barisan Nasional (National Front)
CBM Confidence Building Measures
CCP Chinese Communist Party
CGDK Coalition Government of Democratic Kampuchea
CMI Chiang Mai Initiative
COMLOG WESTPAC Commander, Logistics Group, Western Pacific
CSCAP Council for Security Cooperation in Asia Pacific
CSCE Conference on Security and Cooperation in Europe
CSFTA China-Singapore Free Trade Agreement
CSI Container Security Initiative
DAP Democratic Action Party
DoC Declaration on the Conduct of Parties in the
South China Sea
EAEC East Asian Economic Caucus
EAEG East Asian Economic Grouping
EAS East Asia Summit
EEZ Exclusive Economic Zone
EU European Union
FEALAC Forum for East Asia-Latin America Cooperation
FDI Foreign Direct Investment
FPDA Five Powers Defence Arrangements
GATT General Agreement on Tariffs and Trade
ICS Institute of China Studies
IGOs International Governmental Organizations
IMF International Monetary Fund
IR International Relations
ISIS Institute of Strategic and International Studies
JCBC Singapore-China Joint Council for Bilateral Cooperation
JI Jemaah Islamiyah
MAPHILINDO Malaysia-Philippines-Indonesia

xi
MCA Malay(si)an Chinese Association
MCFA Malaysia-China Friendship Association
MCP Malayan Communist Party
MIC Malay(si)an Indian Congress
NAM Non-Aligned Movement
NATO North Atlantic Treaty Organization
NDP National Development Policy
NEP New Economic Policy
NIEs Newly-Industrialized Economies
NOC National Operations Council
ODA Official Development Assistance
OSCE Organization for Security and Cooperation in Europe
PAP People's Action Party
PAS Parti Islam SeMalaysia (Pan-Malaysian Islamic Party)
PMC Post-Ministerial Conference
PRC People's Republic of China
PSI Proliferation Security Initiative
RMAF Royal Malaysian Armed Forces
ROC Republic of China
SAF Singapore Armed Forces
SEANWFZ Southeast Asian Nuclear Weapons Free Zone
SEATO Southeast Asia Treaty Organization
SIJORI Singapore-Johor-Riau
TAC Treaty of Amity and Cooperation
UMNO United Malays National Organization
UN United Nations
UNCLOS United Nations Conference on the Law of the Sea
UNDP United Nations Development Programme
UNSC United Nations Security Council
USSR Union of Soviet Socialist Republics
VFA Visiting Forces Agreement
WMD Weapons of Mass Destruction
WTO World Trade Organization
ZOPFAN Zone of Peace, Freedom and Neutrality

xii
 CHAPTER 1

SMALLER STATES AND THE PROBLEMS OF

POWER ASYMMETRY IN INTERNATIONAL POLITICS

"... right, as the world goes, is only in question between equals in power, while the
strong do what they can and the weak suffer what they must."
Thucydides, The History of the Peloponnesian War,
Book V, "The Melian Dialogue "

"Poor Mexico, so far from God, and so close to the United States."
- Porfirio Diaz, President of Mexico, 1876-1880, 1884-1911

"That China should play a role in South East Asia is undeniable, just as it would be
futile to deny the United States a role in Latin America or the Soviet Union in Eastern
Europe. But that role - China's role in South East Asia - must be compatible with our
aspirations. And just as countries in other regions of the world like the presence of
other major powers to act as a counter-weight to their neighboring giant - and they
have suffered because they do not have the presence of such powers - so we today,
need the presence of external powers to act as a counter-weight to the Chinese
presence. The lessons in the other regions must not be lost on us and we are fortunate
enough to have some time still to make the necessary preparations."
M. Ghazali Shafie, Permanent Secretary of Malaysian Foreign Ministry,
December 1968

One of the key defining features of contemporary international politics has been the

uneasy juxtaposition between the notion of sovereign equality and the reality of power

asymmetry among the state actors. Formally, all state actors - regardless of their size

and strength - are considered "sovereign", whose authority and equality ought to be

observed and respected by other members of the international society.1 In practice,

' The understanding and practice of "state sovereignty" - the claim of an exclusive right to govern a
territory and its people - is central to the formation and maintenance of the modern inter-state system.
The origin of the concept is often traced to the "Peace of Westphalia" in 1648, which ended the
internecine Thirty Years' War in Europe. See Martin Wright, Systems of States (Atlantic Heights, NJ:
Humanities Press, 1977). For skeptical views about the sanctity of state sovereignty in practice, see
Mark W. Zacher, "The Decaying Pillars of the Westphalian Temple," in James N. Rosenau and Ernst-
Otto Czempiel, eds., Governance without Government: Order and Change in World Politics
(Cambridge: Cambridge University Press, 1992), pp. 58-101; Stephen Krasner, "Compromising
Westphalia," International Security 20:3 (Winter 1995/96), pp. 115-51; Krasner, Sovereignty:
Organized Hypocrisy (Princeton: Princeton University Press, 1999); Daniel Philpott, "Usurping the
Sovereignty of Sovereignty?" World Politics 53 (January 2001), pp. 297-324.

1
however, the more powerful actors would always have an ingrained tendency to take

advantage of their superiority when desirable and where possible, to turn their might

into a "right" to encroach upon the weaker ones in an essentially anarchic

international system. Such a state of affairs, which reflects an abiding truth about the

affairs of states, is unlikely to be altered by any material advancement of mankind.

While the ongoing processes of globalization and revolution in information,

communication, and military technologies may have transformed the way "power" is

being constituted and exercised, they have not fundamentally altered the asymmetric

nature of power relations.2 In fact, these processes - along with the growing salience

of non-state actors and trans-boundaries problems - have led power asymmetry to

manifest itself in a far more complex form than hitherto, making it an enduring central

problem in international politics.

The study of International Relations (IR) can thus be viewed as an inquiry into

the management of power asymmetry among the purportedly sovereign actors.3

Among other things, it dwells on how the sovereignty norm is at times reconciled

with, and at times compromised by, the forces of power inequality at the regional and

international levels.

In general, there are two basic approaches to study the phenomenon. The first

approach - the mainstream tradition - looks from the viewpoint of the great powers. It

focuses on how the conduct of international relations is shaped by the way in which

the strong seek to dominate - and compete to dominate - the weak via a wide array of

2
Following Robert Dahl, this study defines "power" as the ability to get others to do what they
otherwise would not do. See his Who Governs? (New Haven & London: Yale University Press, 1961);
"The Concept of Power," Behavioral Science 2:3 (1957), pp. 201-15. See also Steven Lukes, ed.,
Power (Oxford: Blackwell, 1986/1994); David A. Baldwin, "Power and International Relations," in
Walter Carlsnaes et al., eds., Handbook of International Relations (London: SAGE, 2002), pp. 177-91;
Felix Berenskoetter and M. J. Williams, eds., Power in World Politics (New York: Routledge, 2007).

3
This study follows the convention of using "International Relations" to refer to the academic
discipline, and "international relations" to the phenomena of world politics.

2
military and non-military means like war, alliance, coercive diplomacy, economic

statecraft, covert actions, and international institutions.4 That the vast majority of 1R

scholarship has adopted such a great-power-centric approach is not surprising. As

observed by Kenneth Waltz, given that it is the major powers who "set the scene of

action for others as well as for themselves", and that the fates of all the states "are

affected much more by the acts and the interactions of the major ones than of the

minor ones," it is only logical that "[t]he theory, like the story, of international politics

is written in terms of the great powers of an era."5

By comparison, very few works have opted for the second approach, which

examines the phenomenon through the prism of "small" states.6 In contrast to the big-

power-centric approach which focuses on how power is being exercised for

domination, this smaller-state-oriented perspective concentrates on the manner and

conditions in which power is being resisted, counter-checked, neutralized, utilized,

accommodated, and/or accepted for self-preservation.

This dissertation adopts the latter approach. It takes a smaller-state

perspective to look into the management of power asymmetry problems - defined

hereby as the vast and immutable disparity in capabilities among the state actors.

4
Examples of such great-power-centric works are, inter alia, Hans J. Morgenthau, Politics Among
Nations: The Struggle for Power and Peace, revised by Kenneth W. Thompson (New York: Knopf,
1948/1993); Charles C. Abbott, "Economic Penetration and Power Politics," Harvard Business Review
26:4 (July 1948), pp. 410-24; Jack S. Levy, War in the Modern Great Power System, 1495-1975
(Lexington: University Press of Kentucky, 1983); Alexander L. George, Forceful Persuasion: Coercive
Diplomacy as an Alternative to War (Washington, DC: The United States Institute of Peace Press,
1991); John J. Mearsheimer, The Tragedy of Great Power Politics (New York & London: W. W.
Norton, 2001); Jakub Grygiel, Great Powers and Geopolitical Change (Baltimore, MD: Johns Hopkins
University, 2006).

5
Kenneth N. Waltz, Theory of International Politics (New York: McGraw-Hill, 1979), p. 72.

6
These can be found mainly in the literatures on "small-states studies". Among the most representative
works are: Annette Baker Fox, The Power of Small States: Diplomacy in World War //(Chicago: The
University of Chicago Press, 1959); David Vital, The Inequality of States: A Study of the Small Power
in International Relations (London: Clarendon Press, 1967); Robert L. Rothstein, Alliances and Small
Powers (New York & London: Columbia University Press, 1968); Marshall R. Singer, Weak States in
a World of Powers (New York: The Free Press, 1972); Michael Handel, Weak States in the
International System (London: Frank Cass, 1981/1990); Efraim Inbar and Gabriel Sheffer, eds., The
National Security of Small States in a Changing World (London: Frank Cass, 1997).

3
 One might wonder: why focus on smaller states? Why focus on the weaker

side of the power equation? Bearing in mind the power-centered nature of

international politics, why bother to adopt a perspective of smaller states who often

appear to be the helpless pawns at the mercy of great-power interests?

Why a Smaller-State Perspective?

The smaller-state perspective is important for both ontological and practical reasons.

Ontologically, such an approach would highlight that international politics is about

the "struggle for survival" as much as - if not more than - the "struggle for power",

as has been traditionally conceived and characterized in the field from Morgenthau to

Mearsheimer.7 To quote John Mearsheimer, "Daily life is essentially a struggle for

power, where each state strives not only to be the most powerful actor in the system,

but also to ensure that no other state achieves that lofty position."8 He adds that

"[e]very state would like to be the most formidable military power in the system" and

that "all states are forced to seek the same goal: maximum relative power."9

These statements are generally true about the great powers; however, they are

not accurate descriptions of the smaller states who make up the vast majority of

members in the international system. Far from striving to be the most powerful actor

in the system, most, if not all, smaller states are constantly forced to struggle for the

very minimal goal of ensuring their survival. This study does not confine "survival" to

the realist notion of freedom from military threats; rather, it refers to as the general

emancipation from any undesirable risks that may jeopardize the existential

7
Indeed, the phrase "struggle for power" is often associated with the subtitle of Hans Morgenthau's
book Politics Among Nations, which has, since its publication in 1948, remained as one of the most
influential texts in the field. This ontological stance leads Morgenthau to argue that "statesmen think
and act in terms of interest defined as power." See Morgenthau, Politics Among Nations, p. 5.

8
John J. Mearsheimer, "The False Promise of International Institutions," International Security 19:3
(Winter 1994/95), p. 9.

9
Ibid., p. 12 and p. 48 respectively.

4
conditions of a state as a sovereign entity. These risks include: the traditional and non-

traditional security problems, economic collapse, social unrest, political instability,

autonomy erosion, etc. While these dangers are of concern to all states including the

great powers, they are particularly threatening to smaller states - not least because the

latter lack resources to cope with the hazards by themselves. Given their innate

inadequacies and vulnerabilities, smaller states' behaviors are almost always driven

by the imperative of struggling for survival. This is not to say that smaller states do

not struggle for power. They do; but when this occurs, the acts are more often a means

to ensure their survival, rather than an end in itself. Viewed in this light, the smaller-

state perspective - by focusing on policy choices made under less advantageous and

more constrained conditions - is thus a more representative ontological approach that

better reflects the quintessence of international politics as a human phenomenon.

This ontological reason is further compounded by some practical

considerations. Contrary to what some might have us believe, the course of

international affairs is not only a product of great power behavior; it is also often a

result of small state-great power interaction and negotiation.10 While it is true that

smaller states are far more affected by the actions of big powers than vice versa, this

does not necessarily mean that they will always be powerless before the larger actors.

In fact, under certain conditions, it is not uncommon for smaller states to yield

considerable influence over the stronger powers.11 These conditions are, inter alia:

competitive relationships among the major powers, the availability of norm-based

10
William Mark Habeeb, Power and Tactics in International Negotiation: How Weak Nations Bargain
with Strong Nations (Baltimore, MD: Johns Hopkins University Press, 1988); T.V. Paul, Asymmetric
Conflicts: War Initiation by Weaker Powers (New York: Cambridge University Press, 1994); I.
William Zartman and Jeffrey Z. Rubin, eds., Power and Negotiation (Ann Arbor: University of
Michigan Press, 2000).

11
See, for instance, Robert Keohane, "The Big Influence of Small Allies," Foreign Policy 2 (1971), pp.
161-83; Chang Jin Park, "The Influence of Small States upon the Superpowers: United States-South
Korean Relations as a Case Study, 1950-53," World Politics 28:1 (Oct 1975), pp. 97-117; John J.
Mearsheimer and Stephen M. Walt, The Israel Lobby and U.S. Foreign Policy (New York: Farrar,
Strauss and Giroux, 2007).

5
institutions and processes (that may serve to restrain the big powers), and - at the state

level - the possession of certain assets (such as resources, location, policy position,

institutional memberships, bilateral linkages, and ideational affinity) that are deemed

critical to the great powers. 12 In general, the higher the value of each of these

structural- and unit-level conditions, the higher the bargaining leverage a smaller state

would have over the major powers. Charles Morrison and Astri Suhrke add that a

smaller actor can influence a larger power in two ways: i.e. "bargaining from

strength" and "bargaining from weakness". The former occurs when an actor attempts

to maximize its bargaining position by manipulating assets in its possession that are

valued by the great power, whereas the latter occurs when an actor seeks to gain

support from a big power without offering obligatory and compensatory concessions

to the power, partly on the ground of its "demonstrable material or political

weakness". 13

The argument that weakness can be a source of strength in interstate

negotiation is perhaps most forcefully articulated by Thomas Schelling, who views

bargaining (both explicit and tacit) as a key pathway for what he terms as the

"strategy of conflict" - the "exploitation of potential force" amongst the adversaries

and partners alike to win gains "relative to one's own value system".14 This view is

12
For the sorts of conditions that may affect the levels of small states' influence toward the larger
powers in particular and international politics in general, see Amry Vandenbosch, "The Small States in
International Politics and Organization," The Journal of Politics 26:2 (May 1964), pp. 293-312; Wayne
A. Wilcox, "The Influence of Small States in a Changing World," Annals of the American Academy of
Political and Social Science 372 (July 1967), pp. 80-92; Ronald P. Barston, ed., The Other Powers:
Studies in the Foreign Policies of Small States (London: Allen and Unwin, 1973); Annette Baker Fox,
The Politics of Attraction: Four Middle Powers and the United States (New York: Columbia
University Press, 1977); Charles E. Morrison and Astri Suhrke, Strategies of Survival: The Foreign
Policy Dilemmas of Smaller Asian States (New York: St. Martin's Press, 1979), pp. 6-9.

13
According to Morrison and Suhrke, through bargaining-from-weakness, a smaller actor practically
presents the great power "with the dilemma of having to support its demands or witness its total
collapse." They note that bargaining of this sort appears to be "a typical feature of alliances among
unequal partners", as illustrated by Saigon's relations with Washington throughout the 1960s and the
first half of 1970s. See Morrison and Suhrke, Strategies of Survival, esp. p. 7 & pp. 61-107.

14
Thomas C. Schelling, The Strategy of Conflict (Cambridge, MA: Harvard University, 1960/1979),

6
echoed by Robert Keohane. In an essay that examines the bargaining behavior of the

United States' small allies such as Pakistan, Israel, Spain, the Philippines, Nationalist

China and Iran in the 1950s and 1960s, Keohane argues that weakness "does not

entail only liabilities; for the small power, it also creates certain bargaining assets."15

He observes that America's crusading spirit to fight communism throughout that

period had presented its smaller and weaker allies with a disproportionate leverage to

influence its own policy - either through formal state-to-state negotiation, through

working relationships with separate elements of the U.S. government, and/or through

informal interactions with domestic interests groups that could be mobilized to solicit

support and public opinion.16 Considering the big influence of smaller states, Keohane

thus writes: "If Lilliputians can tie up Gulliver, or make him do their fighting for

them, they must be studied as carefully as the giant."17

The Research Puzzle

It is with these considerations in mind that this dissertation adopts a smaller-state

perspective to study a particular aspect of the management of power asymmetry in

international politics - i.e. smaller states' "alignment choices" in the face of a rising

and proximate great power.18

Specifically, this study seeks to address a simple but significant puzzle: what

esp. p. 5 & pp. 21-52.

15
Keohane, "The Big Influence of Small Allies," p. 162.

16
Ibid., pp. 161-82.

17
Robert Keohane, "Liliputians' Dilemmas: Small States in International Politics," International
Organization 23:2 (Spring 1969), p. 310.
18
For reasons that will be discussed in Chapter 3, this study makes a distinction between "alliances"
(i.e. military alignments) and the broader phenomenon of "alignments" (the configurations and
reconfigurations of interstate relations that are shaped by the changing distribution of power and
changing state interests). Accordingly, "alliance choices" is referred to a state's decision to enter into or
break away from a military alignment, whereas "alignment choices" a state's decision to maintain or
adjust its pattern of relations with the great powers, as part of its efforts to respond to changes at the
international and domestic levels.

7
do smaller states do when faced with an increasingly stronger and/or potentially

threatening power in close proximity? It seeks to answer such questions as: What

policy options do smaller states have to cope with the challenges and opportunities of

a rising power? Do they necessarily have to align against (i.e. "balancing") or align

with ("bandwagoning") the power, as some mainstream IR theories would have it?19

Do different states respond to the same phenomenon differently? How so, and why

so? Ultimately, in addressing these interrelated puzzles, the study aims to explain the

substance and variations in small-states' peacetime strategies in the face of growing

power disparity with a giant neighbor.

This area of inquiry, of course, represents only a sub-class of the management

of asymmetric power relationships as a socio-political phenomenon. There are many

other aspects of the phenomenon that fall beyond the scope of the study. These

include: small-state strategy toward a distant hegemon, small-state wartime strategy,

as well as asymmetric conflicts between states and non-state actors (for example,

terrorist groups, separatist movements).

There are reasons why this study chooses to focus on small states' peacetime

strategies toward a rising and proximate power, rather than other forms of

asymmetric relations.20 To begin with, a focus on how smaller states struggle to cope

with a proximate and rising power will provide a better case than, say, a remote or a

retreating power in illuminating the nature of interstate relations as a struggle for

survival. For smaller states, a rising power's growing capabilities in both absolute and

relative terms would mean a widening power gap and increasing effects of power

19
See for instance, Waltz, Theory of International Politics-, Stephen Walt, "Alliance Formation and the
Balance of World Power," International Security, 9:4 (Spring 1985), pp. 3-43; Robert Kaufman, "To
Balance or to Bandwagon? Alignment Decisions in 1930s Europe," Security Studies, 1:3 (Spring
1992), pp. 417-47; Randall L. Schweller, "Bandwagoning for Profit," International Security, 19:1
(Summer 1994), pp. 72-107.

20
This section benefits from discussions with David M. Lampton and Wang Gungwu.

8
disparity. If the rising power is geographically proximate to the smaller states, such

effects are likely to be multiplied. This is because proximity, more often than not,

would result in a greater range and a higher intensity of contacts between the states,

thus rendering the smaller actors more exposed to the ramifications of the giant's

growing capabilities. This is particularly so when the powerful neighbor has the will

to flex its muscle and make its presence felt; but even when the colossus turns

isolationist and takes a more subdued approach to regional affairs, it is still likely to

cast a shadow over its smaller neighbors, either by its actions or by its mere existence.

Consequently, a proximate power tends to be viewed as a salient and a long term

factor that smaller states must reckon with at all times. Unlike a faraway-giant whose

presence may come and go, a giant-next-door will always be here.

In this regard, it must be emphasized that the effects of a giant neighbor are

rarely completely negative or positive, but often mixed and ambivalent. As shall be

discussed in more detail in Chapter 3, a hegemon-next-door may be a source of threat

to a smaller state. On the other hand, however, it may also turn out to be an

indispensable source of support to the same actor - either in mitigating a certain risk,

or in promoting a certain goal. In either way, a neighboring giant is always a key

factor in smaller states' quest for survival. Indeed, this is a common pattern that is

discernable in almost every region and sub-region of the world, especially but not

exclusively: the U.S. in the Americas, Russia in Eastern Europe and Caucasus, China

in Southeast Asia, and India in South Asia.

While these asymmetric relations are all marked by a similar pattern of

domination in which a "regional hegemon" 21 seeks to impose its influence over its

surrounding smaller states, the degree and details of such domination vary from

21
On the roles of different powerful states with aspirations of regional hegemony in different
"subordinate state systems", see David J. Myers, ed., Regional Hegemons: Threat Perception and
Strategic Response (Boulder, CO: Westview, 1991).

9
region to region. The variations are a function of a confluence of factors, which

include: the presence or absence of "alternative powers" in the region, the availability

and features of regional multilateral institutions, the extent of intraregional economic

linkages, the depth and range of cross-borders people-to-people activities, the memory

of a hierarchical regional order, the magnitude of political and/or territorial disputes,

as well as the existence and size of ethnic diasporas in smaller states who shares a

socio-cultural identity with the big power. 22 Each of these factors, when combined

with proximity, will multiply the effects of asymmetry in both directions.

To focus on a rising and proximate power is not to lose sight of the "other

kinds" of major powers. In fact, as shall be demonstrated throughout this study, a

discussion on smaller states' alignment choices vis-a-vis a neighboring giant will

necessarily require an examination on the role of "other powers" as well. This is

especially so when the other powers are determined to make a presence in the region,

and when the regional hegemon is not sufficiently powerful to deny the presence of its

peers from its supposedly "sphere of influence". These "alternative powers" may

include: a global hegemon, a regional rival, or other actors who have both the

capability and intention to play a major role in the regional affairs. In part pushed by

these powers' innate inclination to expand their influence wherever they can, and in

part pulled by the smaller states' own desire to draw in other powers in an effort to

strengthen their bargaining position vis-a-vis their giant neighbor, the "other powers"

often constitute an integral part of small-state strategy. Our focus, thus, should not be

construed as a denial of the multiplicity of asymmetry management. At issue is the

22
See David C. Kang, "Hierarchy, Balancing, and Empirical Puzzles in Asian International Relations,"
International Security 28:3 (Winter 2003/04), pp. 165-180; Barry Buzan and Ole Waever, Regions and
Powers: The Structure of International Security (Cambridge: Cambridge University Press, 2003);
Brantly Womack, China and Vietnam: The Politics of Asymmetry (Cambridge: Cambridge University
Press, 2006); David A. Lake, "Escape from the State of Nature: Authority and Hierarchy in World
Politics," International Security 32:1 (Summer 2007), pp. 47-79; Evelyn Goh, "Great Powers and
Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies," International Security
32:3 (Winter 2007/2008), pp. 113-57.

10
focus of analysis, not the omission of relevant objects.

Why focus on peacetime and not wartime strategy? This is chiefly because the

former better reflects the complexity of small states' long-term policy concerns and

options. During wartime, smaller states' policy considerations are more likely to be

short-term and narrow in scope, revolving around options to protect themselves from

an immediate security threat. Their policy responses, accordingly, are more likely to

rely on the military options of armaments and alliances. In contrast, during peacetime,

especially in the absence of a direct military threat, smaller states are more likely to be

concerned about a broader range of state goals, which involve not only security but

also prosperity, autonomy, and maneuverability. As a result, their responses are more

likely to be more broad-based, covering both military and non-military options. In

addition, in the absence of an all-out great-power conflict, smaller states are also more

likely to be able to maintain a more "balanced" stance and to avoid aligning

themselves with any particular power bloc. Under such circumstances, a smaller

state's strategic choices - how close or how far it chooses to develop its relations with

individual big powers, what policy goals it seeks to pursue and prioritize vis-a-vis

external actors, which policy assets it chooses to mobilize in pursuit of those goals,

etc - will provide a better indicator to reflect the country's long-term priorities and

strategies in a world of power asymmetry.

At a more fundamental level, one might ask: what do we mean by "smaller

states"? What are the consequences of being "small" in international politics? In what

way will an immutable gap in capabilities constitute problems to smaller states? These

questions are important because unless we have a better understanding of their

inherent vulnerabilities and problems, we will not be able to explain how and why

smaller states behave and make policy choices the way they do.

The remaining part of this introductory chapter seeks to address these basic

ll
issues. I will first deal with the definition problem by identifying and assessing the

key attributes that make smaller states a distinctive category distinguishable from big-
<i
powers. I will then discuss three major genres of problems that are typically faced by

smaller states, namely security, economic, and political risks. In the concluding

section, I will explain why small-state behavior is best understood through such a

trinity conception. I will contend that "size" would have an impact on a state's foreign

policy behavior in so far as its physical limitation leads to a higher level of risks and a

restricted range of response options, which, in turn, would substantially constrain the

state's choice of strategies.

Defining "Smaller States"

A review of the literature on smaller states reveals that, there is no consensus among

IR scholars about the definitional issues of the term - i.e. what constitutes and defines

small-states' "smallness"? In what sense is a small-state generically different from a

great-power as a category of sovereign-actors? Do small states exhibit distinctive

behavioral patterns?

The difficulty in deriving on a commonly accepted definition is chiefly due to

the fact that, the countries which are often categorized as "small states" - from

Finland to Fiji, from Malaysia to Mauritania, from Paraguay to Palau, and from

Singapore to Sierra Leone - are in fact a very diverse group. These states, many of

which were born out of the decolonization process in the post-World War Two period,

are heterogeneous in almost all major aspects, ranging from the levels of

development, resource endowment, and military preparedness, to political systems,

cultural values, and social structures. Such diversities render it difficult to identify the

common denominators of these actors, thereby complicating the definition task.

This problem is further convoluted by the tendency of different writers to use

12
different criteria for determining which countries are small states, and which are not.

Depending on the defining variables they use, different writers have even employed

different terminologies to label them. Some use "small states" interchangeably with

"small powers" and "weak states."23 Some use it to mean "micro states."24 Yet others

equate it with "intermediary states", "secondary states", or "middle powers."25 These

differing labels have created a great deal of confusion as to whether they refer to the

same entities, and in what way do the terminologies overlap and diverge. Given the

complexity of the issue, some of the important works on small state studies have

taken a stance that generally eschews or avoids the definition issue.26

In order to develop a working definition of smaller-states for the purpose of

this study, it is necessary to survey and evaluate the various criterion used by different

writers. While the criteria are numerous, they can be discussed along two lines: (a) the

quantitative and tangible measurements; and (b) the qualitative parameters.

The Quantitative Approach

During the initial stage of the development of small-state studies as an area of inquiry

in IR in the 1950s and 1960s,27 most of the writers chiefly adopted a quantitative-

23
For example, Rothstein, Alliances and Small Powers; Singer, Weak States in a World of Powers;
Handel, Weak States in the International System.

24
See, for instance, Edward Dommen and Philippe Hein, eds., States, Microstates, and Islands
(London: Croom Helm, 1985); and Jorri Duursma, Fragmentation and the International Relations of
Micro-States: Self-determination and Statehood (Cambridge: Cambridge University Press, 1996).
25
Examples are, inter alia, Andrew Hurrell, "Some Reflections on the Role of Intermediate Powers in
International Institutions," in Andrew Hurrell et al, Paths to Power: Foreign Policy Strategies of
Intermediate States, Latin American Program Working Paper No. 244 (Washington, DC: The
Woodrow Wilson International Center for Scholars, March 2000), pp. 1-10; Randall L. Schweller,
"The Problem of International Order Revisited," International Security 26:1 (Summer 2001), pp. 161-
86; Andrew F. Cooper, Richard A. Higgott, and Kim Richard Nossal, Relocating Middle Powers:
Australia and Canada in a Changing World Order (Vancouver: University of British Columbia Press,
1993); Jonathan H. Ping, Middle Power Statecraft: Indonesia, Malaysia and the Asia-Pacific
(Hampshire: Ashgate, 2005).

26
For instance, Singer, Weak States in a World of Powers.

27
While smaller states or the "non-great powers" have been in existence in both the Western and non-
Western parts of the world throughout history, studies on small-state behavior before the 20th century

13
based approach in describing small-statehood. 28 Small states are defined as those

sovereign-actors who are small or weak in physical and measurable terms. These

tangible attributes include the size of a territory, its population, the level of its national

income, the scale of its military potentials, the possession of resources, and so forth. 29

The problem with the quantitative-based definitions is that they are at best

futile and at worst arbitrary. This is because any categorization of "small vs. big" and

"weak vs. strong" can only be considered in relative and in sectoral terms. For

instance, Argentina is a "small" state when compared to the United States, but it is

obviously a relatively much larger actor than Paraguay, Uruguay, and many other

countries in South America. The same can be said of Nigeria in West Africa, Iran in

Middle East, Indonesia in maritime Southeast Asia, Vietnam in Indochina, and so on.

In terms of sectors, a state can be small or weak in one domain but sufficiently big or

strong in another. For example, Saudi Arabia may be a small actor in the military

sphere, but it is clearly a big player in oil markets. Similarly, Indonesia may be small

in economic and military terms, but it is indisputably big in population, territory, and

natural resources.

Such relativity and sectoral problems thus render the quantitative approach a

fruitless exercise, making it hard to draw any meaningful generalization and

were generally sporadic and confined to a specific country or region. It was only until the post-World
War II period that the studies have developed into a field of research within the study of IR, especially
after the publication of Annette Baker Fox's pioneering work in 1959 on the wartime diplomacy of
small states. On the development of small state studies, see Iver B. Neumann and Sieglinde Gstohl,
"Introduction: Lilliputians in Gulliver's World?" in Christine Ingebritsen, et al., eds., Small States in
International Relations (Seattle, WA: University of Washington Press, 2006), esp. pp. 9-16. See also
Miriam Fendius Elman, "The Foreign Policies of Small States: Challenging Neorealism in Its Own
Backyard," British Journal of Political Science 25:2 (April 1995), pp. 171-217.

28
Jean-Luc Vellut, "Smaller States and the Problem of War and Peace: Some Consequences of the
Emergence of Smaller States in Africa," Journal of Peace Research 4:3 (1967), pp. 252-69; Vital, The,
Inequality of States', David Vital, The Survival of Small States: Studies in Small Power/ Great Power
Conflict (London: Oxford University Press, 1971); Ronald P. Barston, "The External Relations of
Small States," in August Schou and Arne Olav Brundtland, eds., Small States in International
Relations (Stockholm: Almqvist & Wiksell, 1971), pp. 39-56.

29
Tom Crowards, "Defining the Category of 'Small' States," Journal of International Development
14:2 (2002), pp. 143-79.

14
comparison. The approach becomes even more problematic when researchers attempt

to offer a "precise" classification on small states. David Vital, for instance, defines

small states as: "(a) a population of 10-15 million in the case of economically

advanced countries; and (b) a population of 20-30 million in the case of

underdeveloped countries." 30 Such a definition, as acknowledged by Vital himself, is

"frankly subjective, if not arbitrary." 31

Largely due to such problems, towards the late 1960s more and more scholars

became unsatisfied with the quantitative approach. Robert Rothstein, for instance,

points out that small states are not only different in degree, but also different in kind.

To him, small states "are something more than or different from Great Powers writ

small." 32 Other scholars like Robert Keohane and D.P.J. Wood have similarly rejected

definitions that rest merely on simple quantitative measurements over physical size

and material strength. Keohane notes that purely objective criteria will lead to

"spectrum that can only be divided arbitrarily" and that "'objective reality' does not

determine statesmen's behavior directly." 33 Wood, on the other hand, observes that

"Whatever scales of magnitude are employed seem arbitrary and it is difficult to pick

out on them where smallness begins or ends." 34 In sum, these observations suggest

that while tangible attributes are essential for the categorization task, they do not by

30
Vital, The Inequality of States, p. 8. Other instances of such approach are: Barston, "The External
Relations of Small States"; Commonwealth Secretariat, Vulnerability: Small States in the Global
Society, Report of a Commonwealth Consultative Group (London: Commonwealth Secretariat, 1986);
and Commonwealth Secretariat, A Future for Small States: Overcoming Vulnerability (London:
Commonwealth Secretariat, September 1997). The Commonwealth Secretariat in its 1985 report
defines any country of "around one million or less" as "small". This figure was revised to "1.5 million"
in its 1997 report.

31
Vital, The Inequality of States, p. 7.
32
Rothstein, Alliances and Small Powers, p. 1.

33
Keohane, "Lilliputians' Dilemmas," p. 296.

34
D.P.J. Woods, "The Smaller Territories: Some Political Considerations," in Burton Benedict, ed.,
Problems of Smaller Territories (London: The Athlone Press for the Institute of Commonwealth
Studies, University of London, 1967), p. 29.

15
themselves provide sufficient parameters to draw a clear defining line. In order to

better discern the "genetical" and behavioral patterns of state actors, the quantitative

approach must be complemented by the more important qualitative variables.

The Qualitative Approach

This definitional approach concentrates on the situational and behavioral qualities that

are distinctively attributed to small states as a genre of state actors. Unlike the

quantitative approach which focuses on what the states are, this approach looks at the

qualitative dimensions of what the states could and would do in the asymmetric inter-

state system.

The qualitative definitions of small states are innumerable. For the purpose of

our study, it is sufficient to provide some of the best known and representative of

these definitions, which can be found in the works of Annette Baker Fox, Robert

Rothstein, and Michael Handel. Baker Fox notes that small states "are almost by

definition 'local' powers whose demands are restricted to their own and immediate

adjacent areas ... [T]he power of the small state is narrow in 'domain' however much

or little may be its 'weight'." 35 Elsewhere, she defines a small state as "a state lacking

the military power to carry out a policy by force against a large state for any

protracted period."

Rothstein, on his part, proffers a definition that combines both material and

psychological dimensions. He notes that a small power is "a state which recognizes

that it can not obtain security primarily by use of its own capabilities, and that it must

35
Baker Fox, The Power of Small States, p. 3.

36
Annette Baker Fox, "Small State Diplomacy," in Stephen Kertesz and M.A. Fitzsimons, eds.,
Diplomacy in a Changing World (Notre Dame: University of Notre Dame, 1959), p. 339.

16
 37

rely fundamentally on the aid of others [italics my own]."

Fox and Rothstein's definitions are complemented by Handel's conception of

"weak states." He stresses that in the study of international relations, "it is not the size
38
of a state which matters, but rather its relative strength [emphasis added]."
39
He then

notes that "small states are characterized by their military weaknesses", relatively

limited "range of interests and influence", 40 and relatively limited "viable policy

options."41

These definitions are considered representative and instructive, in that they

capture a number of key contextual and psychological attributes that fundamentally

distinguish smaller-states from big-powers as a category of entities in international

politics.

First, Rothstein's definition reveals that small states "think and act

differently" 42 chiefly because of their self-awareness about their lack of capabilities to

effectively pursue their state goal. This self-recognition has ramifications for small

states' behavior. That is, unlike the big powers who constantly seek to maximize their

relative power vis-a-vis other actors, smaller states are primarily concerned with their

own survival and self-preservation.

Second, unlike the big powers whose interests and influence could go as far as

their capabilities would render, small states' major concerns and foreign policy reach

is largely confined to their immediately adjacent region; and unlike the big powers

whose superiority is manifested in all major domains, small states' potency - if any -

37
Rothstein, Alliances and Small Powers, p. 29.

38
Handel, Weak States in the International System, p. 10.
39
Ibid., p. 36.

40
Ibid., p. 42.

41
Ibid, pp. 45-7.

42
Rothstein, Alliances and Small Powers, p. 1.

17
is restricted to only one or few realms.

Third, unlike the big powers who have the strength to tackle or absorb the

effects of external shocks, small states are typically more vulnerable to outside

pressures, chiefly because they lack resources to mitigate the risks by themselves, and

partly because their internal weaknesses may "tempt strong and aggressive neighbors"

- or for that matter, any larger actors - to expand. 43

Finally, unlike the big powers who enjoy a wide array of policy tools at their

disposal (most notably the privilege of taking unilateral coercive actions), smaller

states' policy options are much more limited. They often must rely on others in order

to compensate for their innate weaknesses.

Despite their virtues in highlighting the key qualitative attributes of small states, the

above definitions are not without problems. One may find fault, for instance, with

their preoccupation and overemphasis on military security issues. While this focus

was understandable during the Cold War decades largely because of the urgency of

military problems and primacy of realist thought throughout the period, it has

nonetheless been done at the expense of obscuring the non-military variables that are

equally important for the definition task.

Indeed, the assertion that smaller states are more concerned with survival and

security-preservation (rather than power-maximization) does not imply that security is

their only policy goal. In fact, as will be demonstrated throughout the study, in

situations where security is not directly at stake, a small state would seek to pursue

other state goals as well, such as prosperity, maneuverability, and autonomy. This is

important because the pursuit of multiple state goals will have a direct bearing on

smaller states' behavior - specifically, on the way they evaluate the efficacy of the

43
Arnold Wolfers, "In Defense of Small Countries," The Yale Review, 33:2 (December 1943), p. 210.

18
available policy alternatives. That is, if and when security is not the only nor the most

pressing goal, a small state is more likely to opt for non-military strategies such as

regional cooperation and multilateral institutions - rather than military alliances - as

its policy option.

A Working Definition and Classification

Based on the above discussion, a "smaller state" is defined hereby as a sovereign

actor who recognizes that its own inherent inadequacies and vulnerabilities will

confine its foreign policy priorities to its immediate areas, and who realizes that it

must enlist the assistance of others (great powers and/or likeminded states) in its

struggle to pursue its multiple policy goals of security, prosperity, and autonomy.

The defining attributes that are entailed in the above characterization are by no

means exhaustive. Different scholars have tended to use different defining criteria that

may or may not overlap with these attributes. Robert Keohane adds an important

variable when he suggests that researchers "should focus on the systemic role that

states' leaders see their countries playing."44 This criterion leads him to categorize

four genres of states, as follows:

"/I Great Power is a state whose leaders consider that it can, alone, exercise a large,
perhaps decisive, impact on the international system; a secondary power is a state
whose leaders consider that alone it can exercise some impact, although never in
itself decisive, on that system; a middle power is a state whose leaders consider that
it cannot act alone effectively but may be able to have a systemic impact in a small
group or through an international institution; a small power is a state whose leaders
consider that it can never, acting alone or in a small group, make a significant
impact on the system,"45

Accordingly, great powers are referred to as "system-determining" states, secondary

powers "system-influencing", middle powers "system-affecting", and small powers

44
Keohane, "Lilliputians' Dilemmas," p. 295.
45
Ibid., p. 296.

19
"system ineffectual". 46

Keohane's categorization is novel in the sense that, by focusing on a country's

systemic role, it has shifted the attention away from the traditional concentration on

unit-level variables. His notion of "leaders' perception of systemic role", however,

raises some important questions: what determines a leader's perception about his or

her country' role in the international system? Why do certain leaders consider their

countries capable of exercising some impact on the system, while others don't? Why

do certain leaders of smaller states consider their countries to be "system-affecting"

while others "system-ineffectual"? Can one attribute this entirely to the individual

states' differing levels of capabilities? Or could it also be due to other factors like a

nation's self-image, its people's collective memory, or its ruling elite's desire to shape

the external environment for their domestic political ends? What dictates the decisions

of leaders as to which institutions and countries they should turn to in order to boost

their capabilities to exercise some systemic impact?

These issues notwithstanding, Keohane's categorization is cogent and useful.

Indeed, some of the later scholars have concurred with Keohane's classification

schema. Baker Fox, for instance, uses the term "middle powers" in her 1977 book and

refers it to those countries who are "in the aggregate less influential than the second-

tier [great] powers" but "on certain issues, at certain times, under certain

circumstances, can be at least as influential, if not more so."47

For the sake of the conceptual parsimony and the analytical purpose of this

study, Keohane's categorization schema will be simplified into two genres, i.e. "big

powers" and "smaller states." The former includes both "great powers" and

"secondary powers" in Keohane's terms, whereas the latter encompasses "middle

46
Ibid, pp. 295-6.
47
Baker Fox, The Politics of Attraction, p. 2.

20
powers" and "small powers." Considering that one of the main research tasks of this

study is to examine how different states use different combinations of strategic and

diplomatic tools to cope with a rising power, the selected cases will be those "system-
AQ

affecting" and not "system-ineffectual" smaller states. I will return to this in a later

section ("Rationale for Case Selection" in Chapter 4). Henceforth, this study will use

"smaller states" to encompass "small powers", "middle powers", and "weak states";49

and it will make no distinctions between "big powers" and "great powers." These

ideal types are summarized in Table 1.1 below.

The reasons why I choose to use "smaller states" and not "small states" or

"small powers" are two-fold: first, to highlight the relative nature of the term; and

second, to use the term to refer to those who clearly cannot be categorized as the "big

powers", because of their inability to make any systemic impacts by themselves.

One caveat is in order. The classification adopted in this study does not imply

that there is any clear-cut dividing line between the categories. Nor does it suggest

that the categorization is a static one. Far from it, as the long river of international

history has shown, the rise and fall of great powers is not only common, but is very

much the norm. 50 There have been numerous cases where smaller states flourished to

big powers rank (e.g. Britain after the Industrial Revolution, Japan after the Meiji

Restoration), and equally plentiful occurrences where great powers fell to secondary

status (China after 1840, the European powers after World War II). This is not the

48
This focus is due to the consideration that "system-affecting" states will provide an empirically
richer case than "system-ineffectual" states to illustrate the manner and the extent to which smaller
actors may strive to exert influence on the international system, either by working with neighboring
countries or working through alliances and/or multilateral institutions. This will be made clear in the
following chapters.

49
There are reasons why we prefer "smaller states" to other terms. We eschew "middle powers" in
order to avoid the problems of arbitrary. We eschew "weak states" in order to avoid confusing our
subject matter with the type of states that are "weak" in terms of governing capacity.

50
Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from
1500 to 2000 (New York: Random House, 1987).

21
place to discuss the factors leading to the rise and fall of big powers. Rather, the aim

here is to illustrate the key definitional attributes that distinguish different categories

of state-actors.

Table 1.1:
Key Defining Variables of "Smaller States" and "Big Powers"

Physical size; State goal; scope of Range of policy Self-perception of

material strength interest and policy options systemic role
reach; level of (in Robert Keohane's
vulnerability terms)

Big Powers - Relatively bigger - Struggle for power - Enjoy a wide Great Powers (or
range of policy Superpowers):
- Relatively - With extensive options
stronger (in all foreign policy System Determining
major domains: interests and - Ranging from - "a state whose leaders
military, economic, influence that reach coercion, subtle consider that it can, alone,
& technology) far beyond its pressure, exercise a large, perhaps
national frontiers, as persuasion, to decisive, impact on the
far as its capabilities concession international system"
and aspirations would
render - Both military and
non-military tools Secondary Powers (or
- Less vulnerable; of statecraft Second-tier Great
higher capacity to Powers):
tackle or absorb the - Afford to take
effects of risks; a unilateral actions System-influencing
relatively higher when desirable and - "a state whose leaders
degree of national where feasible; consider that alone it can
self-sufficiency ready to pursue exercise some impact,
bilateral and although never in itself
multilateral decisive, on that system"
measures on
selective and
voluntary basis

Smaller - Relatively smaller - Struggle for - Possess only a Middle Powers:

States survival and self- limited range of
- Relatively preservation policy options System-affecting
weaker; exhibit - "a state whose leaders
potency only in one - With limited areas - Must enlist consider that it cannot act
or few domains of interest and external aid and alone effectively but may
foreign policy reach support from other be able to have a systemic
that is confined actors and impact in a small group or
primarily to institutions (e.g. through an international
immediate and alliance, regional institution"
regional areas integration,
multilateral Small Powers:
- More vulnerable; institutions,
lower capacity to international law) System Ineffectual
cope with the effects - "a state whose leaders
of risks; more consider that it can never,
dependent on outside acting alone or in a small
forces; more group, make a significant
susceptible to outside impact on the system."
pressures

22
 Having addressed what smaller states are, let me deal with the issues of what

and how smaller states do. In my view, the best approach to understand the smaller-

state behavior as a category in IR is to look into the types of "risks" and the "response

options" that are unique to them. The former is about the consequences of smallness

(what types of risks do smaller states typically face?), whereas the latter is about the

range of policy options (in the light of the risks, what policy alternatives do smaller

states have in order to compensate for their innate limitations?). I will cover the first

theme in the following section, and leave the second theme to Chapter 2.

Consequences of Smallness in World Politics

What consequences will smaller states have to face as a result of their smallness and

disadvantageous position in a world of power asymmetry? Based on the nature of

stakes involved, the consequences can be grouped into three major genres, namely:

security, economic, and political risks. While each of the risks is faced by all state-

actors including the big powers, they are particularly detrimental to smaller states.

This is in part because smaller states lack resources to mitigate and withstand the

hazards by themselves, and in part because their internal weaknesses are prone to

inviting more external exploitations.

Security risks

This refers to the type of hazards that may threaten the physical base, population

safety, and territorial integrity of a sovereign actor in the international system.

Because smaller states more often are militarily weak and unable to defend

themselves from external aggression on their own, they are particularly vulnerable to

this sort of risks.

Traditionally, the bulk of the literature in IR - especially those from the realist

23
tradition - has focused primarily on this risk.51 Kenneth Waltz, for instance, famously

argues: "In anarchy, security is the highest end. Only if survival is assured can states

safely seek such other goals as tranquility, profit, and power." 52 In this regard, the

realist conception of "security" has long been confined predominantly - if not

exclusively - to the kind of military threat that are originated from state actors.53 This

military focus is not surprising, not least because military hostilities have always been

the most extreme and enduring form of security dangers throughout human history.

Two disastrous world wars and the turbulent Cold War decades in the twentieth

century further justified and reinforced this focus. It was not until the late 1980s that

IR scholars began to pay more attention to the non-military or "non-traditional"

security issues, i.e. the sorts of trans-boundary threats that are originated from non-

state-actors and spontaneous processes, which include environmental degradation,

terrorism, sectarian violence, infectious diseases, etc.54 Given the research objective

of this study, I will focus mainly on security risks that are perpetrated by the larger

powers. Other forms of security threats (like those originating from neighboring

countries and transnational problems) will be mentioned only when they have a

bearing on the policy choices of states under study.

Larger powers may threaten the physical and territorial survival of a smaller

state in countless ways. These range from complete annexation and elimination, to

51
Barry Buzan, People, States, and Fear: An Agenda for International Security Studies in the Post-
Cold War Era, 2 nd ed. (Essex, England: Pearson, 1991).
52
Waltz, Theory of International Politics, p. 126.

53
On the changing conceptions of "security", see David A. Baldwin, "The Concept of Security,"
Review of International Studies 23 (1997), pp. 5-26; Barry Buzan, Ole Waever, Jaap de Wilde,
Security: A New Framework for Analysis (Boulder, CO & London: Lynne Rienner, 1998); Muthiah
Alagappa, "Rethinking Security," in Alagappa, e d , Asian Security Practice: Material and Ideational
Influences (Stanford: Stanford University Press, 1998), pp. 27-64.

54
See, for instance, Jessica Tuchman Mathews, "Redefining Security," Foreign Affairs 68:2 (Spring
1989), pp. 162-77; Norman Myers, "Environment and Security," Foreign Policy (Spring 1989), pp. 23-
41; Thomas Homer-Dixon, "Environmental Scarcities and Violent Conflicts," International Security
19:1 (1994), pp. 5-40; Mely Caballero Anthony, Ralf Emmers, Amitav Acharya, eds, Non-Traditional
Security in Asia: Dilemmas in Securitization (London: Ashgate, 2006).

24
temporary occupation and periodic disruption, to all-out conquest and expansionary

intrusion, and to creeping encroachment and retaliatory incursion. Historical instances

of such threats are innumerable. Among the most frequently cited cases are: the

German attack on Poland in 1939, the Japanese occupation of Southeast Asia during

World War II, the Soviet intervention in Czechoslovakia in 1968, the Chinese

"punitive" war on Vietnam in 1979, the American incursions into Grenada in 1983,

and more recently, the American invasion of Iraq in March 2003 and the Russian

intrusion into Georgia in August 2008.

Power disparity between the aggressor's ability to attack and the victim's

ability to defend is the most prominent feature in each of these cases. Quincy Wright

writes that "every sovereign state tends to impose its will on every other, choosing

first that one least capable of resisting [italic added]." 55 Stephen Van Evera also notes

that "war is far more likely when conquest is easy."56 It follows that all things being

equal, the wider the power gap, the higher the likelihood of the strong to take

advantage of its superiority to attack, and the higher the likelihood of the weak to

become the target of external aggression. But power inequality clearly is not a

sufficient condition for aggression. 57 There is a wide spectrum of factors that may

determine the possibilities, manners, and magnitudes of the use of force by the strong

against the weak. These factors include: the presence or absence of countervailing

forces, the degrees of normative constraints, the cost-benefit ratio of war, the

bargaining leverage of smaller states, and above all, the political motives of the great

55
Quincy Wright, A Study of War (Chicago and London: The University of Chicago Press, 1942/1964),
p. 120.
56
Stephen Van Evera, "Offense, Defense, and the Causes of War," International Security 22:4 (Spring
1998), pp. 5-43. See also Charles L. Glaser and Chaim Kaufmann, "What Is the Offense-Defense
Balance and How Can We Measure It?" International Security 22:4 (Spring 1998), pp. 44-82.

57
On the causes of wars, see E.H. Carr, The Twenty Years' Crisis, 2nd ed. (New York: Macmillan,
1946); Kenneth N. Waltz, Man, the State, and War: A Theoretical Analysis (New York: Columbia
University Press, 1954/1959); Michael Howard, The Causes of Wars, 2nd ed. (Cambridge, MA:
Harvard University Press, 1983).

25
powers (e.g. to maximize its relative power, to acquire critical resources, to deny or

deter its rivals from making certain strategic moves, to penalize a lesser power, and/or

to distract attention from domestic problems, etc).58

Each of these factors will affect the manner and the extent to which a smaller

state is exposed to security threats. Each of them will also determine the range of

policy options that are available to the state, for the purposes of preventing or

reducing the risks it is confronted with. I will return to some of these themes in

Chapters 2 and 3.

Economic risks

Smaller states are characterized not only by their security vulnerability, but also their

intrinsic weaknesses to cope with risks in the global marketplace.

Chiefly owing to their relatively small territory, small population and limited

range of resources, smaller states generally suffer from inter-related problems that are

not shared by the larger economies. These problems include: relatively small domestic

markets, heavy concentration in a few industrial sectors, diseconomies of scale,

relatively limited capacity in the public and private sectors, technology deficit, brain

drain, as well as lower research and development expenditure.59 Together, these

inadequacies greatly constrain smaller states' ability to pursue a high and sustainable

economic growth.

To overcome these innate weaknesses, smaller states have typically adopted

58
See, inter alia, Wright, A Study of War, Singer, Weak States in a World of Powers; Handel, Weak
States in the International System-, Richard K. Betts, "Must War Find a Way? A Review Essay,"
International Security 24:2 (Fall 1999), pp. 166-98; Robert J. Art and Kenneth N. Waltz, eds. The Use
of Force: Military Power and International Politics, 6th ed. (Lanham, MD: Rowman & Litlefield,
2004).

59
See various chapters in E. A. G. Robinson, e d . Economic Consequences of the Size of Nations,
Proceedings of a Conference held by the International Economic Association (London: Macmillan,
1960/1963); Commonwealth Secretariat and World Bank, Small States: Meeting Challenges in the
Global Economy, Report of the Commonwealth Secretariat/World Bank Joint Task Force on Small
States (London: Commonwealth Secretariat: April 2000).

26
open-economy and pursued an export-oriented strategy for tapping the benefits of

larger markets. This strategy, however, often expose the smaller states to the problem

of trade dependency, i.e. a heavy reliance on foreign trade for economic growth.

According to Simon Kuznets, trade dependency is in converse proportion to the size

of a state's economy. That is, the smaller the economy, the higher the trade

dependence ratio (ratio of exports and imports to total output), and vice versa.60 A

high trade dependency entails a high risk to smaller economies, in that it exposes

them to the adverse consequences of external shocks and cyclical downturns in global

markets, over which they have little or no control. This engenders a high degree of

vulnerability upon smaller states.

The risks of trade dependency are particularly greater for states whose

economic structure is characterized by a concentration on a narrow range of

commodities or industrial sectors; and a concentration in a limited number of export

markets and import sources.61 Ceteris paribus, the greater the concentrations, the

higher the degree of exposures, and the more vulnerable a state will become to the

risks of fluctuations in the world economy. This is because a major change in any of

the external conditions - e.g. a drastic fall in the prices of key export commodities, a

big jump in the prices of imported production factors, or a sharp drop in demand from

main export markets (due to global economic slowdown or other reason) - will result

in an even greater adverse consequence for smaller economies. This is perhaps best

illustrated by the saying: "when the U.S. economy sneezes, the world catches a cold."

This maxim is particularly true for many small states around the globe who have,

since the Cold War era, looked upon Washington not only as the key export

60
S. Kuznets, "Economic Growth of Small Nations," in Robinson, The Economic Consequences of the
Size of Nations, pp. 14-32.

61
A. D. Knox, "Some Economic Problems of Small Countries," in Benedict, Problems of Smaller
Territories', Paul Streeten, "The Special Problems of Small Countries," World Development 21:2
(1993), pp. 197-202; Commonwealth Secretariat and World Bank, Small States.

27
destination, but also as the primary source of investment and technology. The

economic recession of the mid-1980s in Southeast Asia, for instance, was to a large

extent reflective of the huge impact of U.S. economy on the smaller nations.

These adverse consequences would dictate smaller states to pursue a strategy

of economic diversification, as will be discussed in Chapter 2. Driven by a desire to

reduce their vulnerability, such a strategy is geared towards diversifying their export

markets and sources of production factors, while guiding them to develop new niche

sectors as the new engines of growth in an increasingly globalized economy.

Globalization is a mixed blessing for smaller states. On the one hand, the

reduction and elimination of national barriers to the transboundary movement of

goods and services has benefited smaller economies (as well as the larger ones) in

many ways: e.g. by promoting greater efficiency, increasing the volume of trade and

investment, as well as diversifying markets and suppliers. On the other hand,

however, the process of globalization - which is marked by an intensification of

competition and an "expansion of unregulated markets" 62 - has brought enormous

pressures and challenges for the smaller developing economies, many of which are

unable to respond adequately due to their lack of internal capacity and resources.63

This is supported by a report of the Commonwealth Secretariat and World Bank joint

task force in 2000, which observes that many smaller states simply do not have

"sufficient institutional capacity to participate fully in international finance and trade

negotiations." 64

Not only are smaller economies unable to take full advantage of globalization,

62
Dani Rodrik, Has Globalization Gone Too Far (Washington, DC: Institute of International
Economy, 1999).
63
For a critical view on the impact of globalization on the "developing" economies, see Joseph E.
Stiglitz, Globalization and Its Discontents (New York: W.W. Norton, 2002). On related issues, see
Colin S. Mellor, "Small Pacific Island States: Development of International Trade," Pacific Economic
Bulletin 12:1 (1997), pp. 70-83.
64
Commonwealth Secretariat and World Bank, Small States, p. ii

28
but they are also incapable of protecting themselves from unfair practices in the

"market liberalization" process. For instance, they are often powerless when the

developed nations pressure them to open up their economies while, at the same time,

adopting protectionist policies against the agricultural and manufactured products in

which developing countries have a comparative advantage. Such practices only serve

to produce unequal benefits or even losses to smaller economies.65 In that sense,

globalization may have widened, rather than narrowed, the inequality gap among

nations, thereby putting smaller states in an even more disadvantaged and vulnerable
66

position.

Another major challenge of globalization for smaller economies has been the

unsurpassable task of grappling with the volatility of trans-boundary capital flows.

The liberalization of capital movement has certainly benefited many smaller states by

raising their investment levels, hastening their integration into the world markets, and

diversifying their financial risks. Nevertheless, the fact that a big proportion of these

massive capital flows are in the form of speculative short-term private funds, which

can be flowed in and out of a country rapidly, makes them a highly disruptive force

that threatens the financial stability and economic well-being of smaller countries.

Critics of "market fundamentalism" like Joseph Stiglitz argue that liberalization of

capital markets and the excessive degree of capital mobility has increased the

"developing" economies' vulnerability to contagious attacks.67 This was evident in

the successive financial crises in Mexico (1994-95), East Asia (1997-98), Brazil

65
This view is perhaps best articulated by the former Malaysian prime minister Mahathir Mohamad.
See his Globalisation and the New Realities (Subang Jaya: Pelanduk Publications, 2002); Reflections
on Asia (Subang Jaya: Pelanduk Publications, 2002).

66
The International Monetary Fund (IMF), the vanguard of globalization, admitted in 2007 that
technology and foreign investment have worsened income inequality around the world in the past two
decades. See IMF, World Economic Outlook: Globalization and Inequality (Washington, DC:
International Monetary Fund, 2007).
67
Stiglitz, Globalization and Its Discontents.

29
(1999), and Argentina (2001-02), where the unregulated movement of capital -

coupled with and worsened by problems in domestic macroeconomic and exchange

rate policies as well as flawed corporate governance and weak banking system - had

combined to trigger the contagious financial crises in one region after another.68 In

short, whilst economic openness increases economic growth, it also increases the risks

of economic volatility and vulnerability.

To mitigate these economic risks, smaller states tend to characteristically

pursue a variety of internal and external strategies. Internally, they are expected to

diversify their economic base, strengthen their macroeconomic management, reform

their financial sector, and so forth. 69 Externally, they are inclined to embrace

institutionalized interstate cooperation at both the regional, intra-regional, and global

levels. As shall be discussed in Chapter 2, these institutionalized arrangements are

critically important for smaller states, mainly because they provide a common

platform for these states to combine their resources and coordinate their action, thus

enhancing their collective capabilities to weather the challenges of external shocks

together. A case in point is the East Asian countries' effort after the 1997-98 crisis to

create and institutionalize the ASEAN Plus Three (APT, i.e. ASEAN plus China,

Japan, and South Korea) process, and to strengthen regional financial cooperation

through the Chiang Mai Initiative (CMI). This cooperation is aimed at preventing

future crisis, chiefly by developing a regional currency safety net and by

strengthening regional financial surveillance.

68
Karl D. Jackson, e d , Asian Contagion: The Causes and Consequences of a Financial Crisis
(Boulder, CO: Westview Press, 1999); Miles Kahler, "Economic Security in an Era of Globalization:
Definition and Provision," Pacific Review 17:4 (2004), pp. 485-502.

69
Frank B. Rampersad, "Coping with Globalization: A Suggested Policy Package for Small
Countries," The Annals of the American Academy of Political and Social Science 570:1 (2000), pp.
115-25.

30
 The creation and development of APT reflects an important theme in small-

state economic strategies. That is, smaller states have a tendency to use regional

institutions as a platform to bind and strengthen their economic ties with the big

powers, with an eye to maximize benefits from the larger economies.

To be sure, big powers can and often do play both positive and negative roles

in smaller states' economic management. Big powers are often the largest trading

partner for most small states, absorbing a large portion of the latter's exported

products and supplying most of their imported materials. More often, they are also the

key provider of foreign capital, technology, expertise, trade preference arrangements

and developmental aid for the same group of countries. Each of those elements is

critical for smaller states' efforts to develop their economies.

Then again, big powers can also be a source of economic problems to smaller

states, as they may impose economic sanction, manipulate commodity prices, reduce

their demand for small states' exports, or discontinue their supplies of capital and aid.

A big power who is a global hegemon may - consciously or not - bring greater

adverse consequences to smaller economies. For instance, it can use its influence in

international institutions to dictate certain rules and conditions that directly or

indirectly undermine smaller states' quest for development. In addition, as

exemplified by the U.S. current economic woes, a hegemon's sheer size and its

leading position in the world economy will also mean that its own domestic problems

- from falling stock prices to financial chaos and to deepening recession - will

quickly evolve into a global crisis that threatens the economic health of all nations,

particularly the vulnerable smaller states.

A big power in close geographical proximity may play a similarly ambivalent

role. A neighboring giant - with a larger market and a wider range of resources - may

become a formidable competitor to its surrounding smaller economies, either in terms

31
of attracting foreign direct investment, or in gaining access into key export markets,

or both. This is particularly so for smaller nations whose level of development and

economic structure resembles that of the giant. Because of geographical proximity, a

big power may also turn out to be a major source of conventional threat and trans-

boundary problems to its adjacent states. Any major developments inside and outside

the big power - e.g. military conflicts, political unrests, economic instabilities,

environmental degradations, refugee flows, etc - is likely to spillover to its

neighboring countries. This may disrupt or derail the economic trajectory of the

smaller actors.

Geographical proximity, however, may also serve as a positive force. For

smaller economies, a giant neighbor could mean a vast market in close proximity; and

a rising power would mean a huge and growing market with expanding trade and

investment opportunities to be tapped. Smaller states that will especially gain more

from this vast and growing market will be those: (a) who share a complementary

industrial structure with that of the neighboring giant; (b) who can provide the sort of

production factors critically needed by the big power; and (c) who have cordial

political relations with the big power.

In addition, geographical proximity may entail a high degree of economic

interdependence. This is especially so in the era of globalization, when economic

problems in one country will quickly bring contagious effects on its neighboring

states, as already noted. Regional developments in East Asia in the wake of the

financial crisis indicate that, transboundary problems like financial contagion will

necessitate regional states - big and smaller countries included - to cooperate on an

institutionalized basis, in the hope of coping with the common economic risks that no

country can handle alone. Once the big and smaller states are interlocked in

institutional settings, their economic and functional cooperation are likely to expand -

32
vertically and horizontally - into a web of multi-level and multi-sector collaboration.

Their interests are likely to become more intertwined, thereby ameliorating the

problem of power asymmetry among them. This is evidenced by the ASEAN states'

interactions with China since the 1990s, as shall be illuminated in Chapters 7 and 8.

Political risks

This refers to a host of issues that may erode the political foundations of a state as a

sovereign actor in the Westphalian system. Unlike security and economic dangers that

involve primarily tangible values, political risks concern the intangible, the subjective

and yet perhaps the most fundamental values of statehood - i.e. a sense of

independence and autonomy, a feeling of equality and dignity, a yearning for freedom

of action, as well as a moral authority and capacity to govern.

Political risks may stem from internal and external sources. Internal political

risks include insurrection, secessionist movements, civil strive, and internal

subversion; whereas external political risks may include political interference and

domination by external powers.

Risks of this nature are described as subjective in that they are largely

interpreted, ordered, and represented by the state elites who are in power. They are

deemed fundamental in that their magnitude will determine the very existence and

character of a state in the international system. In their extreme form, political risks

may disintegrate a state or turn it into a non-functioning and/or a subordinate,

"satellite state" that is subservient to external forces.

IR scholars have long observed that smaller states are acutely sensitive to

issues of inequality and infringement of their "sacrosanct" sovereignty. Some analysts

suggest that this sensitivity is precisely because of, not in spite of, small states'

physical weaknesses. "Characteristically", Annette Baker Fox writes, "small-state

33
leaders strive to compensate for their military inferiority by emphasizing respect for

their dignity." 70 Arnold Wolfers, from another standpoint, observes: "The sensitivity

of the weaker countries to anything that suggests disregard of their equal rights or

their dignity may appear excessive and annoying. It is, however, deeply rooted not

only in the relative vulnerability of their position but also in the fervor with which

they cling to the benefits of an independence which is often the result of bitter

struggles against domination [italics added]." 71

This observation in effect demonstrates that smaller states' sensitivity is often

a product of various factors. In addition to their innate vulnerability, other factors that

may affect smaller states' attitudes toward political risks include: historical memory

and past interaction with the big powers (past suzerain-vassal relations, colonial

experience, previous political intrusions, etc), self-image, collective identity, religious

and cultural factors, leader's idiosyncrasies, geopolitical circumstances, domestic

political functions, and magnitude of security threat. As will be made clear throughout

this study, it is due to the differing combinations of these factors that certain smaller

states have appeared more sensitive to political risks than others.

It is important to study these factors - specifically, in what way and to what

extent they will affect individual states' sensitivity and susceptibility to different

forms of political risks - because each of them will have a direct bearing on smaller

states' foreign policy choices, including their strategies toward the big powers. Take

the Southeast Asian states' policies as examples. While concerns about political risks

are one of the reasons why countries like Indonesia, Malaysia, and Singapore have

chosen to avoid forging formal military alliance with the United States, the degrees

and causes for these concerns vary from country to country. The same can be said

about these countries' reluctance to ally with a rising China. I will elaborate on these
70
Baker Fox, The Power of Small States, p. 182.
71
Wolfers, "In Defense of Small Countries," p. 202.

34
issues in Chapters 7 and 8.

That smaller states are sensitive about political risks does not necessarily mean

that they will always prioritize matters of autonomy and equality over other concerns.

In fact, as will be shown in Chapter 5, at the times when a smaller state is confronted

by a profound and immediate threat, the state is likely to align with a stronger power

for security, and by so doing prepare to downplay and live with the political risks that

may arise from the asymmetric alliance.

A "Trinity" of Risks

These three genres of risks can be viewed as a "trinity", because their causes and

effects are inextricably intertwined with one another. Security risks, for instance, may

precipitate economic problems, either by directly devastating a smaller state's

economic infrastructure, or by diverting its resources from development. In addition,

security threats - both traditional and non-traditional - may also lead to political risks.

This may happen when external forces intrude and undermine a smaller state's

sovereignty, or when the people become frustrated over the government's failure to

manage a certain security issue in a sufficient and timely manner.

In a similar vein, protracted economic stagnation and hardship may also spark

discontent among the populace against the governing elite, thereby turning an

economic problem into a political risk. This is more likely for countries where the

ruling elites rely principally on economic performance for their political legitimacy.

In those countries, if the economic growth slows or turns into a severe recession, it is

likely that the problem of "relative deprivation", which may occur among the people,

may result in resentment and physical aggression against the authority.72 Or if an

72
Ted Robert Gurr, Why Men Rebel (Princeton, NJ: Princeton University Press, 1970); James M.
Olson, C. Peter Herman, and Mark P. Zanna, eds., Relative Deprivation and Social Comparison
(Hillsdale, NJ: Lawrence Erlbaum, 1986); Iain Walker and Heather Jean Smith, Relative Deprivation:
Specification, Development, and Integration (Cambridge: Cambridge University Press, 2002).

35
economic hardship is accompanied by an uneven distribution of wealth among

identity groups, the situation may trigger ethnic tensions and inter-group conflicts. In

both circumstances, an economic risk may escalate into internal political and security

problems.

Economic problems may incur other forms of security and political dangers.

At a time of economic difficulty, a government is likely to reduce its budget

allocation for defense. This may undermine the state's capacity to cope with the

external security challenges in the mid- and long-term. In addition, lingering

economic woes may also compel the state elites to seek greater assistance from

outside actors, either a big power or an international organization (e.g. International

Monetary Fund). This is likely to increase the state's external dependence and to limit

its autonomy and freedom of action, thereby eroding the elites' moral authority in the

eyes of their domestic constituencies. These risks will be particularly high for post-

colonial countries, whose people tend to be acutely sensitive about matters of

independence and dignity.

Political risks, by the same token, may have direct and indirect implications

for both economic and security stakes. For instance, erosion in the ruling elites'

authority may weaken the government's capacity to implement an effective economic

program and to enforce a credible security policy. It may intensify inter-elite

struggles, cause public disgruntlement, deter foreign investors, or worse, engender

civil strife and internal unrest, thus paralyzing economic activities and causing

security problems. These consequences, in turn, are bound to further undermine elites'

moral authority and capacity to govern.

Significantly, these three risks are best described as a trinity (see Figure 1.1 below)

not only because they are interrelated in their causes and effects, but also because they

36
are interlinked in terms of the trade-offs involved in tackling them. That is, when a

smaller state seeks to mitigate certain risks by pursuing a particular policy measure,

the process will inevitably expose the state to other forms of hazards. A smaller state,

thus, cannot hope to tackle all three genres of risks by using a single policy approach

at any single time (see Figure 2.1 on p. 91). These themes will be illustrated more

fully in Chapter 2, when I discuss the range and the linkages of smaller states' policy

responses to the problems of power asymmetry.

Figure 1.1:
Smaller States' Trinity of Risks

Summary

To summarize, this chapter has argued that for ontological and practical reasons, it is

important to adopt a smaller state perspective to study IR as a field of study. It has

also contended that it is crucial to study smaller states as a distinctive category of IR,

chiefly because they exhibit a behavioral pattern that is by and large different from

that of the big powers. Due to their inherently limited size and variety of resources,

smaller states tend to have a much more limited range of state goal, policy reach, and

policy options, as compared with that of the big powers. Such limitations effectively

mean that smaller states generally are not only incapable of exerting any systemic role

on their own (unlike the big powers), but they are also more constrained by, and

exposed to, the structural forces. Because they are much more vulnerable to security,

economic, and political risks, smaller states must necessarily enlist - and rely on - the

37
external actors (i.e. great powers, neighboring countries, and/or international

institutions) in their ceaseless quest for survival in the anarchical international system.

It is precisely these situational features that constitute an enduring dilemma for

all smaller states: the more dependent they are on external actors for addressing

particular risks, the more they are exposing themselves to certain pressures and

dangers from the very same source of external aid they have turned to, thereby

making them even more vulnerable in a world of power asymmetry.

To say that smaller states as a whole exhibit a behavioral pattern that is

different from that of the big powers is not to say that smaller states always think and

act alike among themselves. As shall be shown in the following chapters, while

smaller states all enlist external assistance to enhance their capability to mitigate risks,

they tend to do this in different ways and to different degrees, either by approaching

different actors, by enlisting different sorts of assistance, and/or for mitigating

different types of risks.

Chapters Outline

This introductory chapter has specified the research puzzle, the scope, and the object

of this study. It has illuminated why it seeks to examine a subclass of the larger

phenomenon of small state-big power relations, namely smaller states' policy

responses to a rising and proximate great power.

Chapter 2 deals with the question of policy options: in light of the risks, what

kinds of policy alternatives do smaller states have? What are the tradeoffs involved in

each of the policy options? On this basis, Chapter 3 moves on to discuss how the

policy tradeoffs may affect smaller states' alignment choices vis-a-vis the big powers.

The chapter first explains why the mainstream balancing and bandwagoning schools

cannot capture the range of smaller states' policy options in the face of a rising power

38
in close proximity, before proceeding to elucidate the conception of "hedging" as an

alternative alignment choice.

Chapter 4 describes the research design of the study. It seeks to operationalize

the dependent variables (parameters to measure how states hedge differently), identify

the independent variables (parameters to measure and explain why states hedge

differently), contrast the contending hypotheses (structural pressures vs. domestic

legitimation), as well as explain the rationale of case selection (why Malaysia and

Singapore's China policies).

Chapters 5 to 8 delve into historical and empirical cases by focusing on

selected Southeast Asian states' alignment choices in the face of a re-emergent China.

Specifically, Chapters 5 and 6 traces the origins of Southeast Asian states' hedging

behavior by examining the factors shaping individual ASEAN countries' strategies

toward big powers during the Cold War period. Chapters 7 and 8 respectively discuss

Malaysia and Singapore's China policies during the post-Cold War era.

Chapter 9 concludes by summing up the main argument and the key findings

of the study. It then discusses the theoretical implications of the findings by analyzing

the explanatory strengths of different models in accounting for the variation in smaller

states' alignment choice. Finally, it acknowledges the limitations of the study and

suggests the direction of future research.

39
 CHAPTER 2

ASSESSING
SMALLER STATES' POLICY OPTIONS

"[A] prince ought never to throw in his lot with one more powerful than himself in an
aggressive cause, unless sheer necessity compels him. In case of victory, he remains
the prisoner of that stronger ally. And princes ought to avoid at all costs placing
themselves at the mercy of others. ... Nor should any state believe that it can enter
into any such venture and alliance with complete assurances as to the outcome;
rather, it ought always to consider carefully all the dubious possibilities. For this is
the order of things. To avoid one danger without exposing oneself to another is
impossible. Prudence consists rather in knowing how to weigh the various perils
involved, and to choose the less harmful as the good."
Niccolo Machiavelli, The Prince, Chapter XXI

"Shall I join with other nations in alliance? If allies are weak, am I not best alone? If
allies are strong with power to protect me, might they not protect me out of all I
own?"
King Mongkut, the fourth king of Siam of the Chakri Dynasty, 1851-1868

In Chapter 1,1 have attempted to define the object of this study by identifying the key

qualitative and quantitative attributes that make "smaller states" a distinctive category

in international relations. I have then used a "trinity of risks" framework to elucidate

the sort of problems typically faced by smaller states in a world of power asymmetry.

On that basis, this chapter will proceed to discuss smaller states' options to

mitigate the trinity of risks. To perform this task, the chapter is divided into five major

sections. The first section provides a brief overview of the major types of military and

non-military approaches that are characteristically adopted by smaller states to cope

with the problems of power asymmetry in international politics. For the sake of

analytical simplicity, it groups the approaches into three broad categories - i.e.

alliances, institutionalized cooperation, and internal efforts. The second to fourth

sections illuminate the three policy approaches in turn. In each of these sections, I

evaluate the advantages and drawbacks of each of the approaches. The fifth and final

40
section adopts the trinity framework to analyze the trade-offs involved in the policy

options. I argue that there is a structural dilemma embedded in smaller states' efforts

to reduce the trinity of risks as outlined. That is, the nature of the trinity is such that a

state cannot hope to rely on one single approach to mitigate all three risks at a single

time, and that regardless of which approach a state adopts, its attempt to use that

approach to mitigate certain risks will inevitably expose it to other forms of dangers.

Typologizing Smaller-State Policy Options

In light of the trinity of risks outlined in Chapter 1, what sort of options do smaller

states have? What trade-offs are involved, and what choices would they make? I have

argued that in order to compensate for their inherent disadvantages in size and

strength, smaller states must necessarily enlist the assistance of other actors. The

questions are: "who" the actors might be, "what" aid is to be acquired, and "how" the

help can be enlisted?

In general, the existing literature has emphasized two broad policy options, i.e.

alliances and regionalist-multilateralist approaches (what I would term "institutions"

or "institutionalized cooperation"). These approaches differ from each other in almost

every aspect. The former refers to an act of acquiring security assistance by forming a

military alignment with other countries (often a big power), whereas the latter refers

to an act of acquiring foreign policy gains by forging trade and functional cooperation

with like-minded countries at the regional and/or global levels.

These two approaches, of course, are not either-or options. Smaller states may

and often do pursue them concurrently. However, it is clear that different states tend

to pursue them in different ways, and to different degrees. Some may choose to rely

on their military alliance with a big power as the cornerstone of their foreign policies.

Others may prefer to avoid aligning with any particular big power, and instead opt for

41
regionalism and multilateralism as a principal way of ameliorating the problems of

power asymmetry. Yet others may try to strike a balance between the two.

That smaller states must necessarily enlist external support does not mean that

their internal efforts are insignificant. Although this issue may not have received due

attention in the literature, internal effort is in fact a key component in almost every

state's management of power asymmetry. As shall be demonstrated throughout the

study, it is the manner and the efficacy of a smaller state's internal efforts that

determine how best the state could enhance its bargaining leverage vis-a-vis the

external actors, and how best it could make use of the available external assistance. It

is a key factor determining why certain smaller states fair better in grappling with

their innate vulnerabilities than others.

As such, internal efforts are considered here as the third approach, alongside

alliances and institutions. Each of these approaches will be discussed in turn below.

Attention will be given on how each of the options is aimed at compensating for

smaller states' vulnerabilities, and what trade-offs are involved in its implementation.

Alliances

This is a policy in which a state chooses to ally militarily with other actors, either for

reducing threat from a common adversary, or for maximizing one's own relative

power position, or both.1 According to Hans Morgenthau, alliances enable nations to

"add to their own power the power of other nations" or to "withhold the power of

1
This study uses "alliances", "military alignments", and "military coalitions" interchangeably. It
distinguishes "military alignment" from "political alignment", which is referred to political partnership
between two or more states that may not involve military cooperation. We will return to this in a
discussion on "alignment choices" in Chapter 3. For theoretical analyses of alliances, see Arnold
Wolfers, ed., Alliance Policy in the Cold War (Baltimore, MD: The Johns Hopkins Press, 1959);
George Liska, Nations in Alliance: The Limits of Interdependence (Baltimore, MD: The Johns Hopkins
Press, 1962); Robert E. Osgood, Alliances and American Foreign Policy Interdependence (Baltimore,
MD: The Johns Hopkins Press, 1968); Stephen M. Walt, The Origins of Alliances (Ithaca, NY: Cornell
University Press, 1987); Glenn H. Snyder, Alliance Politics (Ithaca: Cornell University Press, 1997).

42
other nations from the adversary." 2 George Liska also opines: "Alliances are against,
-2

and only derivatively for someone or something."

Alliances may take different forms and serve different functions,4 In terms of

forms, they may manifest in "asymmetric alliances" (i.e. military alignments between

a great power and smaller states) or "symmetric alliances" (alignment among states

with roughly equivalent capabilities).5 In addition, they may also take the form of

"bilateral" and "multilateral" alliances; or "loose and informal military cooperation"

or "full-fledged alliances" that are characterized by an explicit commitment of mutual

security assistance and collective defense, as well as the maintenance of an integrated

command structure, standardized operating procedures and standing forces.6

In terms of functions, alliances may serve various purposes, such as balancing

and bandwagoning. As will be elaborated in Chapter 3, the former - by entering into

an anti-hegemonic alliance - is aimed at counter-checking and containing a threat

from an adversary (a big power or a neighbor); whereas the latter - by entering into a

hegemon-dominated camp - is intended to gain profit or to avoid attack from the

hegemon.

Regardless of their forms and functions, alliances may benefit smaller states in

2
Hans J. Morgenthau, Politics Among Nations: The Struggle for Power and Peace, revised by
Kenneth W. Thompson (New York: Knopf, 1948/1993), p. 197.

3
Liska, Nations in Alliance, p. 12.

4
For a detailed typology of alliance, see Bruce M. Russett, "An Empirical Typology of International
Military Alliances," Midwest Journal of Political Science 15:2 (May 1971), pp. 262-89. See also
Synder, Alliance Politics.
5
Different scholars have used different terminologies to describe these two types of alliances, ranging
from "dominated alliances" vs. "alliances among equals", to "big-power-led alliances" vs. "alliances
among small powers". See, for instance, George Liska, Alliances and the Third World (Baltimore, MD:
The Johns Hopkins Press, 1968); Russett, "An Empirical Typology of International Military
Alliances"; Michael Handel, Weak States in the International System (London: Frank Cass,
1981/1990), pp. 119-67; James D. Morrow, "Alliances and Asymmetry: An Alternative to the
Capability Aggregation Model of Alliances," American Journal of Political Science 35:4 (November
1991), pp. 904-33.

6
Arnold Wolfers, "Alliances," in David L. Sills, e d . International Encyclopedia of the Social Sciences
(New York: Macmillan, 1968), p. 268; Osgood, Alliances and American Foreign Policy.

43
many ways. Militarily, alliances may provide a straightforward route for smaller

states to marshal strength from their stronger partner, thereby augmenting their

weaknesses and beefing up their security. As observed by Inis Claude: "States

struggling for what they regard as appropriate places in the distribution of power

discover readily enough that they can enhance their power not only by the 'natural'

method of building up their own resources, but also by an 'artificial' method of

linking themselves to the strength of other states. Indeed, this is the only method

available to the bulk of states in the actual circumstances of modern history [emphasis

added]." 7

In specific terms, the key military benefits that a smaller state may hope to

secure from alliances are: (a) security umbrella, i.e. an explicit commitment to

provide military assistance in the event of external aggression; (b) supplies of military

hardware, aid, doctrine, and technology; (c) opportunities to influence the behavior of

their allied partners, including preventing them from aiding its adversaries (both

internal and external); and (d) a source of regional stability and order.8

Alliances may benefit smaller states in other realms as well. Politically,

aligning with a powerful actor may enhance a smaller state's prestige and status, both

at the domestic and regional levels.9 Economically, an alliance with a big power may

open up huge opportunities for smaller states, by giving them access to a bigger

international market as well as a larger pool of capital, technology, and developmental

aid. In a more indirect but perhaps more important way, a reliable alliance would also

7
Inis L. Claude, Jr., Power and International Relations (New York: Random House, 1962), p. 89.

8
See, for instance, Liska, Alliances and the Third World; Glenn H. Snyder, "Alliances, Balance, and
Stability," International Organization 45:1 (Winter 1991), pp. 121-142; Rothstein, Alliances and Small
Powers-, Michael N. Barnett and Jack S. Levy, "Domestic Sources of Alliances and Alignments: The
Case of Egypt, 1962-1973," International Organization 45:3 (Summer 1991), pp. 369-95; Steven R.
David, Choosing Sides: Alignment and Realignment in the Third World (Baltimore, MD: The Johns
Hopkins University Press, 1991).

9
Liska, Alliances and the Third World, pp. 27-9.

44
mean a reliable security umbrella, which will allow smaller states to devote their

limited resources to their economic development. In addition, the acquisition of

advanced weaponry and new technology, along with increased military activities

resultant from alliance operations, may also create spillover benefits to smaller states'

economy, by increasing productive resources and by invigorating indigenous defense

industry and related sectors.10

These multiple benefits, however, often come with a political price. An

alliance between lesser states and a preponderant power is, by its nature, an unequal

partnership. 11 Such partnership may be justifiable in wartime, or when the smaller

actor is confronted by a direct security threat. But in other periods, a coalition of

unequal partners "is likely to lapse into domination by the senior partner and the

willing sinking of interests be replaced by resentment and resistance." 12 In an

asymmetric alliance, a smaller state is likely to risk exposing itself to the unsolicited

influence and interference from the stronger partner. This may erode the state's

autonomy, limit its space of maneuvering, and deepen its dependency on the big

power, thereby inviting domestic political opposition and undermining the ruling

elites' authority in the eyes of the masses and socio-political groups at home.13

10
On the reciprocal relationships between military and economic activities, see A. F. Mullins, Jr., Born
Arming: Development and Military Power in New States (Stanford: Stanford University Press, 1987);
Ethan Barnaby Kapstein, The Political Economy of National Security: A Global Perspective (New
York: McGraw-Hill, 1992).

11
George Modelski, e d , SEATO: Six Studies (Canberra: FW Cheshire for the Australian National
University, 1962); Liska, Alliances and the Third World, esp. Chapter II, "The Balance of Power and
Preponderant Power: Alliances of Small and Great Powers," pp. 23-43; Rothstein, Alliances and Small
Powers.

12
David Vital, The Inequality of States: A Study of the Small Power in International Relations
(London: Clarendon Press, 1967), p. 187.

13
On these themes, see Mark J. Gasiorowski, "Regime Legitimacy and National Security: The Case of
Pahlavi Iran," in Edward E. Azar and Chung-in Moon, e d s . National Security in the Third World: The
Management of Internal and External Threats (Hants, UK: Edward Elgar, 1988), pp. 227-50; Barnett
and Jack S. Levy, "Domestic Sources of Alliances and Alignments". For analyses of autonomy-
security trade-off of alliances, see Michael F. Altfeld, "The Decision to Ally: A Theory and Test,"
Western Political Quarterly 37 (1984), pp. 523-44; Morrow, "Alliances and Asymmetry."

45
Externally, it may also weaken the state's credibility and independence in the eyes of

the international community. Such political risks are particularly high in countries

where the society is extremely sensitive about foreign intervention, either because of

their colonial past, nationalistic pride, religious sentiments, or contemporary

geopolitical circumstances.

Concerns about political risks would have a direct bearing on smaller states'

alignment decisions. The concerns may affect, among others, the states' decisions

about whether they should enter into a formal alliance, with whom they should form

an alliance, to what extent they should forge military cooperation with a particular

power, how close or how far they should position themselves vis-a-vis the major

powers, and so on. For example, scholars have observed that states who are "reluctant

to accept outright alliance with a great power because it carries overtones of colonial

domination" would tend to "prefer arms to alliance because their freedom of political

action is preserved." 14

Political dangers are not the only downside of asymmetrical alliances for

smaller states. There are security risks as well. Glenn Snyder, in his oft-quoted work

on intra-alliance politics, has aptly described these risks as the twin anxieties of

"abandonment" and "entrapment." 15 He observes that security commitments in

alliances "are never absolutely firm, whatever the text of the written agreement;

therefore, the fear of being abandoned by one's ally is ever-present. Abandonment, in

general, is 'defection', but it may take a variety of specific forms: the ally may realign

with the opponent; he may merely de-align, abrogating the alliance contract; he may

fail to make good on his explicit commitments; or he may fail to provide support in

14
Glenn H. Snyder, "Alliance Theory: A Neorealist First Cut," in Robert L. Rothstein, ed., The
Evolution of Theory in International Relations: Essays in Honor of William T.R. Fox (Columbia:
University of South Carolina Press, 1991), p. 103.

15
Glenn H. Snyder, "The Security Dilemma in Alliance Politics," World Politics 36:4 (July 1984), pp.
466-8. Snyder credits Michael Mandelbaum for the twin concepts of "abandonment" and "entrapment".

46
contingencies where support is expected." 16 In addition, smaller states are also

typically worried about the risks of entrapment - i.e. the dangers of being dragged

into a war over the ally's interests that one does not share.17 This view is shared by

Wolfers: "No matter how much protection is offered to weak states, they will never

quite overcome the fear of being drawn into conflicts with countries stronger than

themselves"; consequently, "some weak countries, if left to choose, will cling to the
1 rt

right of remaining on the sidelines just as long as they can." Laurence Martin

similarly observes that, during the Cold War, a determination "to resist entanglement

in either of the great-power blocs" and a desire "to be left alone" had prompted many

new and small states to pledge "non-alignment" and "neutralism." 19

As will be made clear throughout this study, the twin fears of abandonment

and entrapment have been among the key factors shaping maritime Southeast Asian

states' alignment choices. The most illustrative example of this is perhaps the smaller

states' long-standing stance of maintaining "equidistance" relations with all the major

powers, while simultaneously keeping some form of military cooperation with the

"distant" great power - i.e. the United States. I will elaborate on this in Chapters 5-8.

Symmetric alliances, similarly, have their own set of virtues and drawbacks.

On the one hand, a coalition of equal partners will allow the allies to combine their

strengths without losing their autonomy and maneuverability. On the other hand,

however, an alliance of weak actors will run the risk of failing to marshal sufficient

level of collective capabilities needed to resist and contain a common threat. In her
16
ibid.

17
Snyder, "Alliance Theory," p. 93. See also Snyder, Alliance Politics.
18
Arnold Wolfers, "In Defense of the Small Countries," The Yale Review 33:2 (December 1943), p.
215.
19
Laurence W. Martin, "Introduction: The Emergence of the New States," in Martin, e d . Neutralism
and Nonalignment: The New States in World Affairs (Westport, CT: Greenwood, for the Washington
Center of Foreign Policy Research, 1962), p. xi. See also Cecil V. Crabb, J r , The Elephants and the
Grass: A Study of Nonalignment (New York: Frederick A. Praeger, 1966).

47
now classic study on the wartime diplomacy of five small states (Turkey, Finland,

Norway, Sweden, and Spain) during World War II, Baker Fox contends that "attempts

to add to the power of the small state by combining with other small and presumably

disinterested states regularly failed, for the sum of their power was weakness and the

combinations were too insubstantial." 20 James Morrow adds that symmetric alliances

have another weakness, as compared to asymmetric alliances: they are less likely to

persist because "a change in either ally's capabilities forces a reallocation of the

benefits of the alliance." 21

Considering the downside of both asymmetric and symmetric alliances, one

might wonder: is there an order of preference for the forms of alliance that some

smaller states may choose over others? If there is, what are the key conditions that

may affect smaller states' choice of preference? Rothstein offers some useful insights:

"Small Powers ought to prefer mixed, multilateral alliances. They provide the most

benefits in terms of security and political influence. If unavailable, they probably

should choose a Small Power alliance in preference to an unequal, bilateral alliance,

particularly if the Small Powers do not fear an immediate threat to their security, and

if their goals in allying are primarily political. An alliance with a single Great Power

ought to be chosen only if all the other alternatives are proscribed, and if the Small

Powers fear an imminent attack - and even then only in hopes of improving their

deterrent stance [italics my own]." 22

Rothstein's observation highlights two important points: first, for smaller

states, a coalition that is dominated by a single big power is the least preferable form

of alliance; and second, they will opt for such asymmetric alliance only under certain

20
Annette Baker Fox, The Power of Small States: Diplomacy in World War II (Chicago: The
University of Chicago Press, 1959), p. 185.

21
Morrow, "Alliances and Asymmetry," p. 918.

22
Rothstein, Alliances and Small Powers, p. 177.

48
exceptional conditions, like when they are confronted by an immediate security threat,

or when they have no other better alternative to turn to. I will return to these points in

Chapter 3.

The above discussion, however, does not mean that smaller states must

necessarily choose from one of these alliance forms. There are cases where smaller

states have attempted to forge military linkages with a great power without entering

into a full-fledged alliance. The pattern of alignment choices of several smaller states

in Southeast Asia is a case in point. As will be discussed in Chapters 5-8, while the

maritime Southeast Asian nations have all maintained close military cooperation with

the Western powers, they have chosen to do so in different forms and to different

degrees. Thailand and the Philippines have maintained formal and open alliance

relations with the United States.23 On the other hand, Indonesia, Malaysia, Singapore,

and Brunei - despite their long-established security partnerships with the Western

countries - have refrained from joining any formal and full-blown alliance.24 As will

be discussed in greater detail in the subsequent chapters, the variation is not only a

result of different historical legacies and threat perceptions, but also a function of the

dissimilar domestic political considerations of those smaller states.

23
The alliance relations were formalized in the forms of the U.S.-Philippines Mutual Defense Treaty in
1951 and the Manila Pact in 1954. The latter was a multilateral alliance (involving not only the U.S.,
Thailand, and the Philippines, but also Britain, France, Australia, New Zealand, and Pakistan), which
was institutionalized in February 1955 following the establishment of the South-East Asia Collective
Defence Treaty Organization (SEATO), with headquarters in Bangkok. It was part of the U.S. global
strategy to contain international communism during the Cold War. Although SEATO was dissolved in
June 1977, the Pact has continued to provide the formal basis for the U.S.-Thai alliance relations until
the present day. In the case of Philippine-American ties, although Manila rejected a treaty to renew
American access to its military bases in 1991, the junior partner had opted to rebuild the bilateral
alliance by signing a Visiting Forces Agreement (VFA) with Washington in 1999.

24
To be sure, the federation of Malaya (and after 1963, the expanded federation of Malaysia) during
the early stage of its independence did enter into an alliance that took the form of the 1957 Anglo-
Malayan/Malaysian Defence Agreement (AMDA). It was under the terms of this alliance agreement
that Malaysia was aided by its former colonial ruler, the Great Britain (and its Commonwealth allies),
in its fight against Indonesia's Confrontation campaign during 1963-1966. In 1971, AMDA was
replaced by a Five Power Defence Arrangements (FPDA) between Britain, Malaysia, Singapore,
Australia, and New Zealand, in which an explicit commitment for collective defense was superseded
by a provision for consultation.

49
 In summary, this section has examined the potential benefits and costs of the

different types of alliance as a small-state policy option. Specifically, it has

highlighted that while joining a big-power-dominated alliance may allow a smaller

state to reduce security threats, to maximize economic gains, and to enhance its

prestige at home and abroad, these benefits are often acquired at the costs of exposing

the state to a host of risks. These risks include: unsolicited influence and occasional

interference from the stronger power, reduced maneuverability and freedom of

actions, growing external dependency, as well as the twin security problems of

abandonment and entrapment. Each of these undesirable outcomes entails the risk of

inviting domestic political attacks and undermining the ruling elites' moral authority

to govern at home. By comparison, while a symmetric alliance among smaller states

is politically preferable (in that it allows the smaller actors to preserve their autonomy

and maneuverability), it is nonetheless an unreliable measure to protect their security.

Multilateral alliances like the North Atlantic Treaty Organization (NATO), on the

other hand, while militarily more effective and politically more acceptable, are still

not available in most parts of the world. 25

Given the drawbacks of big-power-led alliance, smaller states tend to avoid

relying on this approach as their primary policy option, unless, of course, when they

are threatened by a direct and immediate security danger, as mentioned. If given a

choice, smaller states are likely to opt for some loose form of security cooperation

with a big power - that falls short of a full-blown alliance - and augment it with other

non-military approaches that will strengthen their position in coping with the external

challenges. Institutionalized cooperation is one of such approaches. It is to this policy

alternative that I now turn.

25
For a theoretical explanation on the absence of NATO-like multilateral alliances in Asia, see
Christopher Hemmer and Peter Katzenstein, "Why is There No NATO in Asia? Collective Identity,
Regionalism, and the Origins of Multilateralism," International Organization 56:3 (Summer 2002), pp.
575-607.

50
 Institutionalized Cooperation

This non-military policy is variously referred to as "institutionalist", "regional

integrationist", or "multilateralist" approach (or "regionalism" or "multilateralism").26

It is a policy in which a state seeks to enhance its international position by forging

institutionalizedforms of cooperation with other countries who share similar concerns

and common interests, either at regional, intra-regional, or global level.27

The policy is termed as "institutionalized cooperation" in this study for two

reasons. First, it is by definition a non-coercive approach; and second, it is an effort

that must be implemented through what students of International Relations (IR) would

call "international institutions", which include not only global inter-governmental

organizations (IGOs) and international regimes, but also regional institutions, intra-

regional collaboration, as well as other cooperative arrangements that are aimed at

26
Conceptually, the term "multilateralism" is used in IR in two different senses. The first refers to a
state's foreign policy inclination, whereas the second a mode of inter-state interactions. Unless stated
otherwise, this study adopts the first usage, which defines multilateralism as a preference of a state to
use multilateral institutions and processes as a means to promote its key policy ends. It is used as
opposed to a preference for unilateralism and/or bilateralism. On the second usage, see Robert O.
Keohane, "Multilateralism: An Agenda for Research," International Journal 45 (Fall 1990), pp.731-64;
John Gerard Ruggie, ed., Multilateralism Matters: The Theory and Praxis of an Institutional Form
(New York: Columbia University Press, 1993). For conciseness reasons, the multilateralist and
regionalist approaches are henceforth referred to simply as the "institutionalist" approach or
"institutionalized cooperation".

27
Theoretically, this approach is rooted in the successive strands of IR literature on "regional
integration" and "international institutions", which were developed largely as a response to the
developments in Western Europe and elsewhere in the post-war decades. These bodies of literature are:
(a) the "functionalist integration" theory in the 1940s and early 1950s; (b) theories of
"transactionalism" (as represented by Deutsch and his associates' work on "security community") and
"neofunctionalism" (Haas's concept of "spillover") in the 1950s and 1960s; (c) theories of "complex
interdependence" (Keohane and Nye's work on transnational relations) and "international regimes"
(Krasner's 1983 book) in the 1970s and early 1980s; and (d) the "institutional" (or "neoliberal
institutionalist") theory (Keohane's numerous writings on international institutions) since the 1980s.
See Karl W. Deutsch et al., Political Community and the North Atlantic Area (Princeton: Princeton
University Press, 1957); Ernst B. Haas, Beyond the Nation-State: Functionalism and International
Organization (Stanford: Stanford University Press, 1964); Stephen D. Krasner, ed., International
Regimes (Ithaca & London: Cornell University Press, 1983/91); Robert O. Keohane and Joseph Nye,
Power and Interdependence: World Politics in Transition (Boston: Little, Brown, 1977); Robert O.
Keohane, International Institutions and State Power: Essays in International Relations Theory
(Boulder: Westview Press, 1989); Robert O. Keohane, Power and Governance in a Partially
Globalized World {London & New York: Routledge, 2002).

51
 28
regulating policies of two or more governments in a given sector(s). Regardless of

the form and domain of activities, institutionalized cooperation is typically forged by

states with an eye "to attain objectives that are seen by them as unrealizable without

cooperating across political and organizational boundaries".29

Considering the complexity and centrality of institutionalized cooperation to

small-state strategies, I shall discuss the policy in greater depth. In the following

pages, I shall briefly describe how it is distinguishable from military alliances, before

elaborating on its benefits and downside to smaller states.

Institutionalized Cooperation versus Military Alliances

As a policy option, institutionalized cooperation is fundamentally different from

alliances in at least three aspects. First, in terms of the modus operandi, an alliance is

an alignment in military affairs, whereas institutionalized cooperation is an alignment

in non-military spheres. It may assume the forms of functional collaboration,

economic integration, as well as regularized political and strategic consultation among

two or more nations.

Second, in terms of functions, alliances are essentially aimed at containing,

countervailing, and/or deterring an adversary (real or potential) by the use or threat of

use of force. Institutionalized cooperation, on the other hand, is intended to produce

positive-sum and mutually beneficial outcomes - albeit not necessarily in an equally

distributed manner - in functional, economic, and/or political domains for the

member states.30 Put differently, whilst the former generally operates in a Hobbesian

28
In this study, the term "international institutions" is used interchangeably with "international
regimes", "multilateral institutions", "international organizations", and "multilateral cooperation".

29
Ernst B. Haas, "International Organization," International Encyclopedia of Social and Behavioral
Sciences (2004), p. 7819.

30
See, for instance, Andreas Hasenclever, Peter Mayer, and Volker Rittberger, Theories of
International Regimes (Cambridge: Cambridge University Press, 1997/2000); Lisa L. Martin and Beth

52
world of ceaseless conflict among egoistic actors, the latter functions in the Lockean

and Kantian cultures of "interdependence, common fate, homogenization, and self-

restraint", which focus primarily on the possibilities of normatively regulated order

and perpetual peace in the interstate society.31

Third, in terms of organizational features, alliances are more often

characterized by a pattern of hierarchy in which the stronger power enjoys a

dominating and superior position over the weaker partners, whereas institutionalized

cooperation is usually conducted on a more equal footing among the member states,

often with a higher degree of normative constraints on state action. This is so for

functional and economic institutions, and is equally so for "cooperative security

institutions" like the Organization for Security and Cooperation in Europe (OSCE)

and the ASEAN Regional Forum (ARF), which allow member states - big and small

- to manage their security and political problems through dialogue and consultation,

rather than war and alliances.32

While institutionalized cooperation has always been practiced by all member

countries of the international community, the manner and extent of the practices tend

to vary from country to country. Some countries clearly are more enthusiastic and

active in pursuing institutionalized cooperation than others. In addition, different

countries also tend to place different emphasis on different types of regionalist-

multilateralist activities, which range from fostering political and functional

collaboration with neighboring countries, promoting regional integration and

A. Simmons, "Theories and Empirical Studies of International Institutions," International Organization

52:4 (Autumn 1998), pp. 729-57.
31
Michael W. Doyle, Ways of War and Peace: Realism, Liberalism, and Socialism (New York: W.W.
Norton, 1997); Alexander Wendt, Social Theory of International Politics (Cambridge: Cambridge
University Press, 1999).
32
Given the nature of their role, these institutions are sometimes termed as "security management
institutions". See Celeste Wallander, Helga Haftendorn, and Robert O. Keohane, "Introduction," in
Helga Haftendorn, Robert Keohane, and Celeste Wallander, e d s . Imperfect Unions: Security
Institutions over Time and Space (Oxford: Oxford University Press, 1999).

53
community building, to upholding international law, supporting multilateral practices,

and taking an activist approach in the global international organizations. In general,

the higher the level of emphasis a state gives to institutionalized cooperation, the

higher the level and the wider the scope the state will involve in these activities.

There is a broad array of factors influencing a state's attitudes toward the

institutionalist approach. The size and strength of a state is one of them. On the whole,

the small and militarily weak states are more likely than the big powers to place more

emphasis and rely more on institutionalized cooperation as a primary policy option.33

This is discernable in smaller states' common and long-standing practice to turn to

global IGOs - most notably the United Nations (UN) and its various specialized

agencies - for protecting their sovereignty and security.34 It is also discernable in the

actors' higher inclination to use regional and multilateral mechanisms as a key

platform to integrate their resources, augment their capabilities, and address their

common problems. These tendencies should not be surprising since smaller states

cannot afford to opt for the going-it-alone option like the big powers. Thus, it is only

logical for them to go-it-with-others in order to better cope with the problems they are

confronted with.

The question is: in what way and to what extent would the institutionalist

approach enhance the smaller states' capacities to cope with their inherent handicaps?

What kinds of downside would the approach entail?

33
This is not to say that big powers are not interested in using international institutions as their foreign
policy tools. We shall return to this shortly, when we discuss the realist perspective on the role of
institutions in international politics.
34
The fact that all smaller states, upon acquiring independence and statehood, have applied to become
a member of the United Nations and to participate in the related UN agencies is testimony to the value
of global multilateral institutions to small states. On small states' participations in IGOs, see William
E. Rappard, "Small States in the League of Nations," Political Science Quarterly 49:4 (December
1934), pp. 544-75; Inis L. Claude, Jr., Swords into Plowshares: The Problems and Progress of
International Organization, 3 rd and revised edition (New York: Random House, 1964).

54
Promises and Pitfalls

Like other smaller-states' policy options, institutionalized cooperation has its own set

of merits and demerits. On the whole, while the policy option offers a crucial and

indispensable way for smaller countries to boost their ability to mitigate economic

and political risks (in a way that may not be acquired through other policy

alternatives), its role in tackling security problems is rather limited, if not unreliable.

Economic Dimension. The institutionalist approach is valuable for smaller states in

that it provides a platform for them to compensate for their innate disadvantages in

size and limited range of resources.

As free-market liberals have long argued, economic integration with other

countries will allow smaller economies to expand their export markets, exploit

economies of scale, enhance efficiency and competitiveness, as well as facilitate two-

way flow of resources, capital, skills, and technology.35 These will help to enlarge

smaller countries' economic base, thereby overcoming their handicap and enhancing

their capabilities to weather external shocks and pursue growth.36 Joining hands with

other similarly-situated countries is particularly crucial when it comes to negotiations

on international trade under the World Trade Organization (WTO) and its predecessor

the General Agreement on Tariffs and Trade (GATT). It may strengthen smaller

states' collective efforts and enhance their bargaining positions vis-a-vis the larger

economies.37 All in all, these advantages render the institutionalist approach a viable

35
BelaBalassa, The Theory of Economic Integration (London: George Allen & Unwin, 1961/1973);
Maurice Schiff, Regional Integration and Development in Small States, Policy Research Working
Paper No. WPS 2797 (Washington, DC: Development Research Group, World Bank, October 2001).

36
Burton Benedict, e d . Problems of Smaller Territories (London: Athlone Press for the Institute of
Commonwealth Studies, 1967); Tony Payne, "Economic Issues," in Colin Clarke and Tony Payne,
e d s . Politics, Security and Development in Small States (London: Allen & Unwin, 1987), pp. 50-62.

37
Roman Grynberg, e d , WTO at the Margins: Small States and the Multilateral Trading System
(Cambridge: Cambridge University Press, 2006); Andrew S. Downes, "The Trade Environment and
Small Countries," World Trade Review 3:3 (2004), pp. 416-21.

55
strategy to enhance smaller states' capacity to protect their economic interests at the

regional and international levels.

These advantages notwithstanding, integrationist arrangements can be

detrimental to smaller and economically disadvantaged states. As discussed in

Chapter 1, increases in international economic linkages will lead smaller states to

become more dependent on external conditions, and thus increase their exposure to

the volatility of the global economy, making them even more vulnerable. The notion

that dependency engenders vulnerability is perhaps expressed most strongly by the

dependency and world-systems theorists, who argue that the integration of

economically weak "periphery" states into the world system only serves to enrich the

wealthy "core" states in the developed world, at the expense of the former's

development. 38 The supporters of the anti-globalization movement also argue along a

similar line, blaming the expansion of world markets for problems like the widening

economic gap between rich and poor countries, uneven development, environmental
39

degradation and other issues of global injustice.

While dependency theorists and anti-globalization advocates are right in

highlighting the inequities of the current global trading system, the fact remains that

the vast majority of smaller states have continued to pursue some form of

institutionalist and integrationist approach, with an eye to benefit from an increasingly

globalized world. The rise of the Newly-Industrialized Economies (NIEs) - and to

some extent, the development of the Southeast Asian "tigers" - in the 1970s and

1980s indicates that in spite of the flawed nature of the current world economic

38
Paul A. Baran, The Political Economy of Growth (New York: Monthly Review Press, 1957);
Immanuel Wallerstein, The Modem World-System (New York: Academic Press, 1974); Fernando
Henrique Cardoso and Enzo Faletto, Dependency and Development in Latin America (Berkeley:
University of California Press, 1979).

39
Derek Wall, Babylon and Beyond: The Economics of Anti-Capitalist, Anti-Globalist and Radical
Green Movements (London: Pluto, 2005).

56
system, smaller states can still attain high economic growth through the late

industrialization strategies.40 The issue, thus, is perhaps less about external linkages

per se, but more about ones' own self-strengthening efforts in diversifying their own

economic base that explains why certain smaller states better utilize the available

external conditions than others for their developmental goals. I shall return to this

issue in a later section below.

Political Dimension. Beyond economic terms, the institutionalist approach is

appealing to smaller states also because of its political and security payoffs. It serves

to help the vulnerable states to ameliorate the problems of power asymmetry in many

ways.

To begin with, thanks to the sovereign equality norm that is customarily

enshrined (although not evenly enforced) in multilateral arrangements, smaller states

are given a status and a voice equal to that of other much larger states. This is in sharp

contrast to alliance arrangements, where smaller actors risk losing part of their

equality and freedom of action because of the hierarchical nature of all great power-

led alliances. As can be observed in the global IGOs (i.e. UN and its affiliated

agencies) and regional institutions (e.g. the European Union [EU] and the Association

of South-East Asian Nations [ASEAN]), smaller states are not only able to preserve

their "formal" equality with the larger actors, but under certain circumstances they

can even influence the great powers behavior in a way that is difficult to achieve in

the alliance settings. In this regard, institutions provide an essential platform for small

states to come together and to act collectively. Specifically, they provide a medium

for smaller actors to shape and internalize certain interstate norms, "in ways that are

40
Alice H. Amsden, The Rise of the Rest: Challenges to the West from Late-Industrialization
Economies (Oxford: Oxford University Press, 2000); John Weiss, Industrialisation and Globalization:
Theory and Evidence from Developing Countries (London: Routledge, 2002).

57
congruent with their interests."41 To quote Robert Keohane: "The small and middle

powers' leaders realize that although they may be able to do little together, they can

do virtually nothing separately. Through an international organization they can

attempt to promote attitudes favorable to their survival - to develop, as it were, an

'international political culture' shaped largely by themselves." 42

There is a range of organizational features of multilateral institutions that

make them a norm-based - and thus politically favorable - platform for smaller

actors. Three features stand out: "issue-linkage", "diffuse reciprocity", and "binding"

functions. They are interrelated and mutually reinforcing.

In multilateral settings, most issues are interlinked and intertwined. This

feature allows member countries to find ways "to gain additional bargaining leverage

by making one's own behavior on a given issue contingent in others' actions toward

other issues." 43 It also partially contributes to what IR scholars have described as

"diffuse reciprocity" practice in multilateral organizations, where actors "contribute

one's share, or behave well toward others, not because of ensuing rewards from

specific actors, but in the interests of continuing satisfactory overall results for the

group of which one is a part, as a whole [italics mine]." 44 As a result, countries

taking part in multilateral processes would generally expect "to yield a rough

41
Andrew Hurrell, "Some Reflections on the Role of Intermediate Powers in International
Institutions," in Andrew Hurrell et al, Paths to Power: Foreign Policy Strategies of Intermediate
States, Latin American Program Working Paper No. 244 (Washington, DC: The Woodrow Wilson
International Center for Scholars, March 2000), pp. 3-4. See also Christine Ingebritsen, "Norm
Entrepreneurs: Scandinavia's Role in World Politics," Cooperation and Conflict 37:1 (2002), pp. 11-
23.

42
Robert Keohane, "Liliputians' Dilemmas: Small States in International Politics," International
Organization 23:2 (Spring 1969), p. 296.
43
Robert Axelrod and Robert O. Keohane, "Achieving Cooperation Under Anarchy: Strategies and
Institutions," in David A. Baldwin, ed., Neorealism andNeoliberalism: The Contemporary Debate
(New York: Columbia University Press, 1993) p. 99. See also Ernst B. Haas, "Why Collaborate: Issue-
Linkage and International Regimes," World Politics 32:3 (April 1980), pp. 357-405.

44
Robert O. Keohane, "Reciprocity in International Relations," International Organization 40:1
(Winter 1986); Ruggie, Multilateralism Matters, esp. pp. 11-2.

58
equivalence of benefits in the aggregate and over time", 45 rather than to maximize

benefits on all issues and at all times. For that reason, member states - even the

stronger ones - are more likely to demonstrate a readiness to make concessions on

certain issues with an eye to exchange for returns on other issues in the future. This is

significant for smaller states, as it signifies that multilateral interactions are more

often a continuous and long term process of give-and-take, rather than a situation

where the strongest-takes-all. Over time, the process may dilute big powers'

capability advantages while enhancing smaller states' bargaining strengths across

issue-areas, thus mitigating the problems of power asymmetry for the disadvantaged

actors.

These effects are augmented by the "binding" function of institutions.

According to Joseph Grieco, the rules of institutional arrangement provide the weaker

states with opportunities for having effective "voice opportunities." This yields what

he calls "the binding thesis": "if states share a common interest and undertake

negotiations on rules constituting a collaborative arrangement, then the weaker but

still influential partners will seek to ensure that the rules so constructed will provide

for effective voice opportunities for them and will thereby prevent or at least

ameliorate their domination by stronger partners." 46 Daniel Deudney adds that the

effects of binding are mutual: that is, the practice of establishing institutional links

between political units actually serves to reduce one another's autonomy.47 Building

upon Grieco's and Deudney's work, John Ikenberry notes: "Binding restricts the

range of freedom of states - weak or strong - and when states bind to each other, they

45
Ruggie, Multilateralism Matters, p. 11. Italics added.

46
Joseph M. Grieco, "Understanding the Problem of International Cooperation: The Limits of Liberal
Institutionalism and the Future of Realist Theory," in Baldwin, Neorealism and Neoliberalism, p. 331.

47
Daniel Deudney, "Binding Sovereigns: Authorities, Structures, and Geopolitics in Philadelphian
System," in Thomas Biersteker and Cynthia Weber, e d s . State Sovereignty as Social Construct
(Cambridge: Cambridge University Press, 1996), esp. pp. 213-6.

59
jointly reduce the role and consequences of power in their relationship."48

Randall Schweller describes the binding strategy as one of the alternative state

responses to rising powers. He notes that by entangling a rising power in

institutionalized cooperative arrangements, binding may serve to achieve three

objectives: (a) "satisfy the prestige demands of the rising power"; (b) give the rising

state "a greater opportunity to voice its concerns and to build, in conjunction with the

other great powers, a new international order that better reflects its enhanced power

and interests"; and (c) increase the costs for the rising power to exercise its might.49

Together, these would have the effect of ameliorating "the revisionist elements of a

rising power's behavior". 50

While Ikenberry's and Schweller's works are specific to strategies pursued by

a leading state or established hegemon, there is evidence that the binding strategy is

practiced by smaller states as well. As shall be demonstrated in Chapters 7 and 8, the

smaller ASEAN states have since the early 1990s pursued a policy aimed at engaging

and entangling China into a web of regional multilateral institutions, as part of their

larger strategy to cope with the re-emerging power. They have created and made use

of the bourgeoning multilateral platforms to influence China's behavior not only by

internalizing sovereign equality norm and cultivating diffuse reciprocity behavior, but

also by binding the rising power to institutionalized cooperative activities across

different levels and sectors.

It is important to reiterate that because of the embedded norms and

48
G. John Ikenberry, After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order After
Major Wars (Princeton: Princeton University Press, 2001), p. 64.
49
Randall L. Schweller, "Managing the Rise of Great Powers: History and Theory," in Alastair Iain
Johnston and Robert S. Ross, eds., Engaging China: The Management of an Emerging Power (New
York: Routledge, 1999), p. 13.

50
Alastair Iain Johnston and Robert S. Ross, "Conclusion," in Johnston and Ross, Engaging China, p.
273.

60
organizational features of multilateral institutions, smaller states are, by and large,

able to attain a considerable degree of political equality with the more powerful

actors, notwithstanding their physical inequality in size and strength. In circumstances

where smaller states are given maneuvering space (because of great-power

competition or other structural reasons) to play a major role in shaping the agenda and

design of the multilateral institutions, they are even capable of influencing the great

powers behavior and punching above their weights in international affairs. Without a

norm-regulated and rule-based multilateral environment, it would be difficult for

smaller states like the Scandinavian countries and the ASEAN states to play a

disproportionate role in shaping the course of events in their respective regions.

This is not to say that international institutions are without drawbacks. In fact,

institutions often incur political costs to states. This may occur when transnational

policy coordination requires member countries to relinquish a certain degree of state

control over a certain issue to the supra-national entity. The act of surrendering state

autonomy, however, does not automatically constitute an erosion of state sovereignty.

50 long as the act is conducted on the basis of non-discriminatory (it is required for all

member states), obligatory (it is required for conforming to certain priori agreed upon

principles), and instrumentality (it is required as a means to pursue certain common

and larger goals), a partial relinquishment of state control is likely to be deemed

politically acceptable, and, indeed, legitimate. 51 Insofar as these conditions are

present, the act is not likely to entail substantial political liabilities to state leaders in

51
The notion that multilateralism confers legitimacy and credibility has been central to the literature on
international institutions. Inis Claude, for instance, argued more than four decades ago that multilateral
organizations such as the UN often exercise a political function of "collective legitimization" for state
policies. See Inis 1. Claude Jr., "Collective Legitimization as A Political Function of the United
Nations," International Organization 20 (1966), pp. 367-79. More recently, Robert Keohane also notes
that it is the "acceptability of the processes by which institutions make decisions" that provides "input
legitimacy" to multilateralism. See Robert O. Keohane, The Contingent Legitimacy of Multilateralism,
GARNET Working Paper No. 09/06 (September 2006), p. 13. See also Francis Fukuyama, America at
the Crossroad: Democracy, Power, and the Neoconservative Legacy (New Haven & London: Yale
University Press, 2006), esp. Chapter 6: "Rethinking Institutions for World Order", pp. 155-80.

61
the eyes of their domestic constituencies. This is unlike alliance arrangements, where

particularistic interests of the more dominant partner often result in the erosion of

autonomy on the part of smaller actors. Viewed in this light, multilateral institutions

are thus a viable means for smaller states to strike a balance between the need to

uphold the norm of sovereign equality and the imperative to cope with the reality of

power asymmetry.

Security Dimension. While few would question the economic and political value of

multilateral institutions to smaller states, there has been considerable debate among IR

scholars about their security role. Different schools of thought - neorealism,

neoliberalism, and constructivism - have different takes on the extent and manner in

which institutions may play a role in fostering international cooperation and

enhancing states' ability to grapple with security problems.

Neoliberalism (or neoliberal institutionalism) contends that institutions are an

important cause of international cooperation, mainly because they can "provide

information, reduce transaction costs, make commitments more credible, establish

focal points for coordination, and in general facilitate the operation of reciprocity."52

In addition, neoliberalism also believes that institutions can deter cheating - a major

barrier to cooperation - largely by pursuing a strategy of tit-for-tat, invoking "the

shadow of the future", and increasing the punishment on cheaters.53 These functions,

in effect, allow self-interested states to achieve and maintain cooperation even under

conditions of anarchy (without any centralized authority to enforce rules). Lisa Martin

52
Robert O. Keohane and Lisa L. Martin, "The Promise of Institutionalist Theory," International
Security 20:1 (Summer 1995), p. 42; Robert O. Keohane, International Institutions and State Power:
Essays in International Relations Theory (Boulder: Westview Press, 1989).

53
Kenneth Oye, "Explaining Cooperation Under Anarchy: Hypotheses and Strategies," in Oye, ed.,
Cooperation Under Anarchy (Princeton: Princeton University Press, 1986); Charles Lipson,
"International Cooperation in Economic and Security Affairs," in Baldwin, Neorealism and
Neoliberalism, pp. 60-84.

62
goes further by arguing that institutions can "induce order of a sort in international

politics", albeit one that produces different efficiency and distributional effects. 54

While most liberals generally share the view that institutionalized

arrangements increase transparency, avoid misunderstanding and reduce the

likelihood of conflicts, they have centered on different ideas in explaining how

institutions may constrain state behavior. Some - like Ernst Haas and Philippe

Schmitter - focus on the "spillover" effects of functionally based organizations,

arguing that growing transaction flows in economic and technical ("low politics")

domains may spill over into the realm of high politics, thereby increasing demands for

further integration, facilitating the growth of regional interest groups and international

bureaucrats, and persuading political elites to solve common problems by bestowing

more authority on supranational institutions.55 Others - like Robert Keohane and

Joseph Nye - focus on the dynamics of "complex interdependence" and "international

regimes", contending that growing transnational connections among states and

societies may increase interdependence and decrease the utility of military power,

thus encouraging self-interested actors to cooperate and refrain from taking unilateral

actions. 56 Yet others - like John Ikenberry - focus on the impact of "institutional

binding", asserting that institutions may allow leading powers and secondary states to

interlock each other in institutionalized collaboration, thereby putting credible

restraints on the leading state's exercise of power, in exchange for the acquiescence of

weaker and secondary states.57 It remains an issue of contention to this day amongst

54
Martin, "An Institutionalist View," p. 78.

55
Haas, Beyond the Nation-State; Philippe C. Schmitter, "A Revised Theory of Regional Integration,"
International Organization 24:4 (Autumn 1970), pp. 836-68.

56
Keohane and Nye, Power and Interdependence; Keohane, "The Demand for International Regimes,"
International Organization 36:2 (Spring 1982), pp. 141-71.

57
Ikenberry, After Victory.

63
scholars as to whether and how far the processes of integration, interdependence, and

interlocking can effectively serve to restrain state behavior. Some critics, mainly from

the realist school, argue that institutions only "have minimal influence on state

behavior." 58

The critics notwithstanding, few would dispute the liberals' contention that

institutionalized cooperation offers small states a more favorable option than a "non-

institutionalized relationship", where weaker states are "subject to the unrestrained

and unpredictable domination" of the more powerful actors.59

This contention is shared by the constructivists, who similarly hold a sanguine

view about the efficacy of institutions in shaping state behavior and addressing

security problems. 60 However, unlike neoliberals who focus on the exogenous effects

of international institutions (i.e. how institutions shape state behavior by altering

actors' calculations over costs and benefits, as measured against "prior" and

"exogenously given" preferences), constructivists stress the endogenous processes.61

From the constructivist viewpoint, the institutional environments "affect not

only the incentives for different kinds of state behavior but also the basic character of

states."62 That is, environmental structures may have an impact on actors not only by

changing the states' consequential appraisal of material rewards and constraints for a

particular action, but also by shaping the preferences and identities of the actors from

58
John J. Mearsheimer, "The False Promise of International Institutions," International Security 19:3
(Winter 1994/95), p. 7.

59
G. John Ikenberry, "State Power and Institutional Bargain: America's Ambivalent Economic and
Security Multilateralism," in Rosemary Foot, S. Neil MacFarlane, and Michael Mastanduno, eds., US
Hegemony and International Organizations (Oxford: Oxford University Press, 2003), p. 52.

60
On constructivism, see Ted Hopf, "The Promise of Constructivism in International Relations
Theory," International Security 23:1 (Summer 1998), pp. 171-200; Dale C. Copeland, "The
Constructivist Challenge to Structural Realism," International Security 25:2 (Fall 2000), pp. 187-212.

61
Alastair Iain Johnston, "Treating International Institutions as Social Environments," International
Studies Quarterly 45 (2001), pp. 487-515.

62
Ronald L. Jepperson, Alexander Wendt, and Peter Katzenstein, "Norms, Identity, and Culture in
National Security," in Peter Katzenstein, ed., The Culture of National Security: Norms and Identity in
World Politics (New York: Columbia University Press, 1996), p. 33.

64
within. For constructivists, international institutions are "social environments" in

which interaction among state agents takes place.63 The quantity and quality of these

social interactions - say, between a group of small states and a big power - can

crucially affect the likelihood and effects of the "socialization process", which, in

turn, may change state agents in fundamental ways. In this regard, Jeffrey Checkel

observes that socialization is the "key mechanism that connects international

institutions and norms to states, or to groups and agents within them." 64 Alastair Iain

Johnston unpacks this mechanism, and outlines three "microprocesses of

65
socialization", namely mimicking, social influence, and persuasion. For

constructivists, it is through such socialization processes that certain interstate

"norms" (like sovereign equality and decolonization) emerged, cascaded and became

internalized among the members of the international society.66

Norms - the "shared expectations about appropriate behavior held by a

community of actors" 67 - have both constitutive and regulative effects. According to

Ronald Jepperson et al., norms may at times function like rules to "specify the actions

that will cause relevant others to recognize and validate a particular identity and to

respond to it appropriately"; and at other times operate as standards "to prescribe or

63
Johnston, "Treating International Institutions as Social Environments."

64
Jeffrey T. Checkel, International Institutions and Socialization, ARENA Working Paper WP99/5
(1999).

65
Alastair Iain Johnston, Social States: China in International Institutions, 1980-2000 (Princeton:
Princeton University Press, 2007).

66
Martha Finnemore and Kathryn Sikkink, "International Norm Dynamics and Political Change,"
International Organization 52:4 (Autumn 1998), pp. 887-917; Robert H. Jackson, "The Weight of
Ideas in Decolonization: Normative Change in International Relations," in Judith Goldstein and Robert
O. Keohane, e d s . Ideas and Foreign Policy: Beliefs, Institutions, and Political Change (Ithaca &
London: Cornell University Press, 1993), pp. 111-38; Biersteker and Weber, State Sovereignty as
Social Construct.

67
Martha Finnemore, National Interests in International Society (Ithaca & London: Cornell University
Press, 1996), p. 22.

65
proscribe ('regulate') behaviors for already constituted identities."68 Taken together,

norms thus "establish expectations about who the actors will be in a particular

environment and about how these particular actors will behave." 69

These notions are central to the constructivist contention that states are

socialized through interaction to form collective identities and interests. Alexander

Wendt defines collective identity as "positive identification with the welfare of

another, such that the other is seen as a cognitive extension of the self, rather than

independent." 70 He adds that to the extent that collective identity exists, "there will be

empathetic rather than instrumental or situational interdependence between self and

other. ... This is a basis for feelings of solidarity, community, and loyalty and thus for

collective definitions of interest."71 Under such social structures, state behaviors are

very much driven by a sense of mutual identification and "a logic of appropriateness",

rather than just a "logic of consequences." 72 Indeed, the progress of regional

integration in Western Europe reveals that it is not uncommon for states who are

interlocked in institutionalized cooperation to define (and redefine) their individual

"national" interests in a way that is more aligned with "group" interests. It is on this

basis of collective identity and collective interests that some constructivists have

argued that institutions may provide a platform for the development of what Karl

Deutsch has coined as "pluralistic security communities", under which groups of

states "share dependable expectations of peaceful change" in their mutual relations,

68
Jepperson et al, "Norms, Identity, and Culture in National Security," p. 54.

69
Ibid.

70
Alexander Wendt, "Collective Identity Formation and the International State," American Political
Science Review 88:2 (June 1994), p. 386.

71
Ibid.

72
On the "logic of appropriateness" and "logic of consequences", see James March and Johan P.
Olsen, "The Institutional Dynamics of International Political Orders," International Organization 52:4
(Autumn 1998), esp. pp. 949-54.

66
and rule out the use of military force as a means of resolving disputes with other

members of the group. 73

For constructivists, thus, institutions are valuable to smaller states on two

levels. First, they provide a platform to regulate state behavior by institutionalizing

and enforcing certain interstate norms that would have the effect of "equalizing" the

unequal actors. These include the sovereignty norm and its corollary principles of

non-intervention and the prohibition on the use of military force (except in self-

defense and collective security). This effect is favorable to smaller states, in that they

will serve to neutralize the military superiority of stronger actors, thereby placing

states on a more level footing. Second, and more fundamentally, institutions provide a

platform for norm internalization, which constitutes and shapes states from within.

This process may cultivate a habit of dialogue, nurture a preference for peaceful

negotiation, develop a mutual perception of interdependence, as well as deepen we-

feelings and a sense of community among state actors regardless of their size and

strength. These cooperative interactions, if repeated and sustained over a long period

of time, can potentially transform the character of anarchy and give rise to collective

identities among the actors.74 In view of these regulative and constitutive effects,

constructivists are thus optimistic about the role of institutions in mitigating smaller

states' security concerns.

By comparison, neorealism has been the most skeptical about the role of

international institutions in world politics. Neorealists such as John Mearsheimer

73
The term "security community" is originally developed in Karl Deutsch et a l . Political Community
and the North Atlantic Area: International Organization in the Light of Historical Experience
(Princeton, NJ: Princeton University Press, 1957). The concept is later resurrected and integrated into
the works of constructivists since the 1990s. See Emanuel Adler and Michael Barnett, Security
Communities (Cambridge: Cambridge University Press, 1998); Amitav Acharya, Constructing a
Security Community in Southeast Asia: ASEAN and the Problem of Regional Order (New York:
Routledge, 2001).

74
Alexander Wendt, "Anarchy Is What States Make of It: The Social Construction of Power Politics,"
International Organization 46:2 (Spring 1992), pp. 391-425; and Social Theory of International
Politics (Cambridge: Cambridge University Press, 1999).

67
contend that institutions matter "only on the margins." 75 Another realist, Joseph

Grieco, maintains that "institutions are unable to mitigate anarchy's constraining

effects on interstate cooperation." 76 In their view, there are two major obstacles to

international cooperation: fear of cheating, and more importantly, state concerns about

"relative gains." 77 In contrast to neoliberals who stress absolute gains from

international cooperation, neorealists believe that states are acutely sensitive to issues

of relative gains and capabilities. 78 This is because in the absence of a higher

authority to enforce rules, states worry that "gaps in gains can be translated into

military advantage that can be used for coercion or aggression."79 In the words of

Michael Mastanduno, "relative position matters because nation-states exist in

anarchy, without a higher governing authority. Anarchy breeds fear and distrust,

leading nation-states to worry, at the extreme, that they will be conquered or

destroyed by their more powerful counterparts." 80 For these reasons, realists argue

that "a state will decline to join, will leave, or will sharply limit its commitment to a

cooperative arrangement if it believes that partners are achieving, or are likely to

achieve, relatively greater gains." 81

In addition to questioning the prospects for international cooperation,

neorealists also have doubts about the role of institutions and international law in

constraining state behavior. From the realist perspective, far from being able to

75
Mearsheimer, "The False Promise of International Institutions," p. 7.

76
Grieco, "Anarchy and the Limits of Cooperation," p. 116.

77
Ibid.; Measheimer, "The False Promise of International Institutions."

78
The question of "relative versus absolute gains" is one of six focal points characterizing the "neo-
neo debate" in the 1980s and early 1990s. See David A. Baldwin, "Neoliberalism, Neorealism, and
World Politics," in Baldwin, Neorealism and Neoliberalism, pp. 3-25.

79
Mearsheimer, "The False Promise of International Institutions," pp. 20-1.

80
Michael Mastanduono, "Do Relative Gains Matter? American's Responses to Japanese Industrial
Policy," in Baldwin, Neorealism and Neoliberalism, pp. 250-66.
81
Grieco, "Anarchy and the Limits of Cooperation," p. 128.

68
restrain big power behavior, the creations and functions of institutions are often

subject to the actions of dominant actors in the international system.82 As argued by

Mearsheimer: "institutions are basically a reflection of the distribution of power in the

world. They are based on the self-interested calculations of the great powers, and they

have no independent effect on state behavior." 83 In the eyes of realists, institutions

can play a role in international affairs only in so far as the great powers want them to.

Institutions are seen merely as a tool by the big powers to maximize their relative

gains, to consolidate their power base, and whenever possible, to deny their rivals the

opportunities to expand influence. Accordingly, neorealists assert that a big power

will play an active role in institutions only if it judges that doing so would be essential

to advance its relative capabilities vis-a-vis others in the system.84 But if the outcome

is deemed to be less than optimal, a big power will not hesitate to scale down (or even

cease) its participation. The best example to illustrate this is perhaps the pattern of

U.S. involvement in the UN system, notwithstanding its central role in the inception

of the world organization. 85 Indeed, from the realist viewpoint, the U.S. incursion

into Iraq and the Russian attack on Georgia are clear indicators of the limitations of

international organizations and international law in constraining state behavior,

especially that of the great powers. When the powerful states are determined to use

force to advance their agenda, there is very little a world organization like the UN can

82
The "hegemonic stability theory" postulates that the world order - along with the key institutions
that help sustain it - is created and sustained by a hegemon who, out of its own interests, takes the lead
to solve a global collective actions problem by providing public goods to members of the international
system.

83
Mearsheimer, "The False Promise of International Institutions," p. 7.

84
An alternative perspective is provided by G. John Ikenberry, who argues that a leading state wants to
establish institutions because institutionalized arrangements "can lock other states into a relatively
congenial and stable order", which helps create "a more favorable and certain environment in which
the leading state pursues its interests." See Ikenberry, After Victory; also his "State Power and
Institutional Bargain," in Foot et a l , US Hegemony and International Organization, pp. 49-70.

85
See various chapters in Foot et a l , US Hegemony and International Organization. See also Stewart
Patrick and Shepard Forman, e d s . Multilateralism and U.S. Foreign Policy: Ambivalent Engagement
(Boulder: Lynne Rienner, 2002).

69
do to prevent or stop them. These events thus validate the realist's long-held position

in questioning the feasibility and reliability of "collective security" as a mechanism to

promote international peace.86

To sum up: neorealism has forcefully argued that institutions only play a

minimal role in promoting security to smaller states. While liberalism and

constructivism have rightly highlighted the virtues of institutionalized cooperation in

allowing smaller states to maximize their economic interests and preserve political

autonomy in the rule-based and norm-regulated environment, the fact remains that

institutions can hardly substitute the role of military alliances in providing security to

the weak. Because of the anarchical nature of the interstate system, no

institutionalized arrangement can effectively guarantee state conformity to norms, let

alone discourage and prevent the powerful states to use force against the weak.

Problems with Neorealist Arguments

These insights notwithstanding, the neorealist arguments suffer from two major

problems. The first problem has to do with the applicability of the realist notion of

"relative gains " (and its related term, "relative power") in explaining small states-

big power relations.

Realists stress that state concern about relative gains is an important factor

driving state behavior. In their view, because states worry that cooperation may lead

to unfavorable "gaps in gains" that would strengthen the relative position and coercive

capability of another actor who might turn out to be a future rival or enemy,

86
For analyses of collective security as an approach to peace, see Claude, Power and International
Relations, esp. pp. 94-204; Claude, Swords into Plowshares, esp. pp. 223-60; Richard K. Betts,
"Systems for Peace or Causes of War? Collective Security, Arms Control, and the New Europe,"
International Security 17:1 (Summer 1992), pp. 5-43.

70
international cooperation is "harder to achieve" and "more difficult to maintain." 87

While this contention may be true in describing relations among "peer

competitors" (i.e. among big powers and among small states),88 it is less pertinent in

accounting for the asymmetric relations between small states and a great power.

Among peer competitors, states understandably would be sensitive to the issue

of relative gains, for the noted reason that any distribution of gains that favor another

actor will run the risk of boosting a competitor's relative capabilities, exposing the

states to security vulnerabilities, and leaving them in an unfavorable position over the

long run.

In the case of asymmetric relations, however, it seems reasonable to suggest

that both smaller states and the big power would be less troubled by the question of

relative gains. In an asymmetric relationship, the power gap is more a "constant" than

a variable. No matter who gains more from international cooperation, the outcomes

are not likely to reverse the asymmetric structure of their power relations, at least not

in the short- and mid-term. Because the capability gap between the two sides is

unequivocally vast and immutable, a big power often does not have to fear that the

gaps in payoffs will substantially erode its superiority and endanger its interests.

Consequently, a big power is not only more disposed to relax its concerns over

relative gains vis-a-vis the smaller actors, but also more willing to make concessions -

either out of practical considerations (e.g. positive relations with the neighboring

smaller states is necessary so that the big power could concentrate on other more

pressing and important problems elsewhere) or because of some cultural factors (the

big power places more value on political deference than material returns), or both.

87
Joseph M. Grieco, "Understanding the Problem of International Cooperation: The Limits of
Neoliberal Institutionalism and the Future of Realist Theory," in Baldwin, Neorealism and
Neoliberalism, p. 302.

88
On the concept of "peer competitors" within the framework of hegemon (dominant global power)-
"proto-peers" relations, see Thomas S. Szayna et a l . The Emergence of Peer Competitors: A
Framework for Analysis (Santa Monica, CA: RAND Corporation, 2001).

71
The long historical interaction between imperial China and the traditional kingdoms

of Southeast Asia is a case in point. 89 In contemporary times, largely due to the

existence of various regional multilateral institutions since the 1990s, the asymmetric

relations between the unequal actors have been further characterized and shaped by

the combined effects of "diffuse reciprocity", "issue linkage", and "binding" features.

On the part of smaller states, the asymmetric nature of the relationship means

that the power gap is largely taken as a given and accepted fact. While the small and

militarily weak actors will always be concerned about the growth of their neighboring

giant's capabilities - both in absolute and relative terms - they would be well aware

that there is not much they can do to stop it. In the light of this accepted fact, smaller

states would be less troubled about "who will gain more". Rather, they would pay

more attention to: (a) how they can maximize their absolute gains from the power's

growing capabilities when all is well; and (b) what contingency measures should they

take in order to reduce the risks if things go awry - i.e. in case the giant neighbor

turns aggressive and uses military force against them. This brings us to the second

problem of the neorealist arguments.

The second problem with neorealism is that, it fails to sufficiently account for

the range of policy options that smaller states may generate from institutions as a foci

to offset the effects of power asymmetry. Realists tend to view institutions from the

prism of balance-of-power. Tony Evans and Peter Wilson, for instance, argue that

institutions are "arenas for acting out power relations."90 Underlying this view is the

assumption that power can only be constrained by power. That is, institutions may

89
See Wang Gungwu, "Early Ming Relations with Southeast Asia: A Background Essay," in John K.
Fairbank, ed., The Chinese World Order: Traditional China's Foreign Relations (Cambridge, MA:
Harvard University Press, 1968), pp. 34-62; Wang Gungwu, The Nanhai Trade: The Early History of
Chinese Trade in the South China Sea (Singapore: Times Academic Books, 1998).

90
Tony Evans and Peter Wilson, "Regime Theory and the English School of International Relations: A
Comparison," Millennium: Journal of International Studies 21:3 (Winter 1992), p. 330.

72
serve to restrain a big power only when there exists a countervailing force among the

member countries.

These assertions are correct, but incomplete. The non-realist arguments as

discussed above suggest that smaller states can in fact hope to use institutions as a

tool to constrain big powers in ways other than the balance-of-power approach. The

liberal notions of interdependence and binding as well as the constructivist idea of

socialization, for instance, are among the major pathways through which institutions

may affect big power behavior and shape regional order.91 Despite their differing

theoretical roots, in practice most of these approaches are not either-or options. They

often take place concurrently. Indeed, the realist and non-realist pathways can be seen

as two sides of the same coin: both are aimed at influencing big power behavior

through institutionalized arrangements, with one taking a more forcible route

(preventing a big power from taking revisionist actions by using the participation of

other military and political heavyweights as a countervailing force) and the other a

more persuasive way (encouraging a power to stay on the cooperative path by

stressing on common interests and shared values). This is discernable in the role of

the ASEAN-based multilateral institutions in allowing the smaller Southeast Asian

states to deal with China since the 1990s, as will be made clear in Chapters 7 and 8.

Assessing the Overall Impact of Institutionalized Cooperation

For smaller states, the advantages of institutionalized cooperation are mutually

reinforcing in many ways. The effects of functional cooperation and economic

integration, for instance, often spillover to high politics areas, leading to a greater

level of political collaboration among regional countries. Intensified political

collaboration over a sustained period of time, in turn, is likely to cultivate mutual

91
Amitav Acharya, "Regional Institutions and Asian Security Order: Norms, Power, and Prospects for
Peaceful Change," in Muthiah Alagappa, e d , Asian Security Order: Instrumental and Normative
Features (Stanford: Stanford University Press, 2003), pp. 210-40.

73
trust, facilitate further integration, deepen complex interdependence, strengthen

collective actions, and even catalyze collective identity formation. In due course, this

may enhance smaller states' capacities to mitigate security risks at both the intra-

mural and extra-mural levels. Specifically, institutions may provide smaller states

with a norm-based platform to address bilateral disputes, to manage intra-regional

problems, to curb local power's aspirations for regional hegemony, and to develop a

regional identity.92 In addition, institutions may also provide them with a common

buffer mechanism to cope with the political and security challenges from the extra-

regional powers. 93 Insofar as these benefits can be tapped efficiently, smaller states

will be able to reduce the risks of bilateral tensions and regional conflicts, thus

reducing the need - and the associated political costs - of turning to great powers for

security. Ultimately, these will help smaller states to concentrate on their domestic

development and internal security problems, while maintaining a degree of autonomy,

legitimacy, and internal cohesiveness.

Institutionalized cooperation, thus, allows smaller states to avoid the

drawbacks of military alliances, while giving them multiple advantages that the latter

does not offer. In view of these advantages, it is therefore no surprise that smaller

states in different regions have all demonstrated a common tendency to opt for

institutionalized arrangements as an indispensable means to compensate for their

weaknesses.

Institutionalized cooperation, however, is not a panacea for smaller states.

Institutions do have their downside, most of which are associated with problems of

92
Acharya, Constructing a Security Community; Ingo Peters, "The OCSE and German Policy: A Study
in How Institutions Matter," in Haftendorn et al., Imperfect Unions, pp. 195-220.
93
Leifer, The ASEAN Regional Forum: Extending ASEAN's Model of Regional Security, Adelphi
Paper no. 302 (London: Oxford University Press for IISS, 1996); Yuen Foong Khong, "Coping with
Strategic Uncertainty: The Role of Institutions and Soft Balancing in Southeast Asia's Post-Cold War
Strategy," in J J . Suh, Peter J. Katzenstein, and Allen Carlson, eds., Rethinking Security in East Asia:
Identity, Power, and Efficiency (Stanford: Stanford University Press, 2004), esp. pp. 198-202.

74
collective actions. 94 These include: group size, provision of the public goods,

heterogeneity, institutional designs, distribution, defection, and so on.95 Very often, it

is the ability to address these issues that determines why some organizations can

deliver better performance than others.

These problems aside, the primary shortcoming of institutionalized

cooperation lies in its inability to provide effective security measures to small states.

That is, once the great powers have decided to use force against a weak state, their

actions are unlikely to be held back by any institutionalized arrangements and their

embedded norms. Take "collective security" - the central doctrine underlying the

formation and function of the UN (and its predecessor the League of Nations). It

refers to a mechanism in which states seek to maintain peace by acquiring

commitments and creating organizational structures designed to guarantee that

aggression by any actor against any other would be resisted and punished by the

combined action of the other members of the international system. Despite the

doctrine's noble aim, there is a clear gulf between its attainment and the real world

conditions, which makes collective security a less than viable policy. Inis Claude

sums up well: "Collective security requires the relinquishment of the sovereign free

hand in the most vital issues of foreign policy, the abandonment of national biases for

and against other states, and a consequent willingness to follow the lead of organs of

the community in taking action in opposition to any aggressor, on behalf of any

victim of attack. It is clear that these subjective prerequisites of a workable collective

94
On collective action, see Mancur Olson, The Logic of Collective Action: Public Goods and the
Theory of Groups (Cambridge, MA: Harvard University Press, 1971); Peter Alexis Gourevitch, "The
Governance Problem in International Relations," in David A. Lake and Robert Powell, e d s . Strategic
Choice and International Relations (Princeton: Princeton University Press, 1999), pp. 137-64.

95
See, inter alia, Claude, Swords Into Plowshares; Miles Kahler, "Multilateralism with Small and
Large Numbers," International Organization 46:3 (Summer 1992), pp. 681-708; Barbara Koremenos,
Charles Lipson, and Duncan Snidal, "The Rational Design of International Institutions," International
Organization 55:4 (Autumn 2001), pp. 761-99; Amitav Acharya and Alastair Iain Johnston, e d s .
Crafting Cooperation: Regional International Institutions in Comparative Perspective (Cambridge:
Cambridge University Press, 2007).

75
security system are far from having been fulfilled, and it is doubtful that a meaningful

trend in that direction can be discerned in contemporary world politics."96 This

observation has been correct throughout the Cold War decades, and remains so today.

In short, the above discussion suggest that while institutionalized cooperation

does provide smaller states with important economic and political benefits in a way

that cannot be obtained by other options, it nonetheless can hardly substitute for the

role of alliances in providing effective security measures to smaller states. Such

inadequacies would mean that in order to effectively mitigate the trinity of risks,

smaller states often find it necessary to complement the institutionalist approach with

other alternative policy responses. These responses include not only military alliances,

but also internal efforts.

Internal Efforts

The argument that smaller states must rely on external assistance - i.e. military

alignment and institutionalized cooperation - by no means imply that smaller actors'

own efforts are trivial. To the contrary, a smaller state's self-strengthening endeavors

- the homegrown efforts to increase and diversify one's own economic and politico-

strategic assets - are necessarily an integral part of its survival strategy. These

endeavors are often the key to determining whether and to what extent a state can

benefit from the available external linkages. If a state's internal efforts are optimal,

the state will be in a better position to make full use of its external linkages.

Conversely, if a state's internal endeavors are insufficient or inappropriate, it will

have little or no bargaining chip to acquire the sort of assistance it needs. Worse, it

may become more dependent on the outside actors, thereby deepening the problems

of power asymmetry.

96
Claudz, Power and Interdependence, p. 199.

76
 A state's internal efforts can be broadly discussed in three clusters of policies,

namely: state- and nation-building, economic diversification, and strategic choices.

While these policies are adopted by all countries, for the purpose of this study I shall

confine my discussion only to smaller states.

State- and Nation-building

State-building is about the creation and maintenance of a functioning state. It refers to

a process of building and strengthening the key governance institutions that enable the

accumulation, concentration, and enforcement of state power - particularly a

monopoly of the legitimate use of force - over a given territory.97 The functions of

state are numerous, each of which requires the building of state capacity in steering,

extracting, executing, regulating, redistributing, mobilizing, and coercing.98 Although

scholarly works on the subject have focused mostly on newly-independent countries,

post-conflict societies, and weak or failed states, state-building is in fact a process that

takes place in every country.99 It may be internally or externally engineered.

Nation-building, on the other hand, is about the formation of a national

identity and a national consciousness within a given border. It refers to a process of

97
See Charles Tilly, "Reflections on the History of European State-Making," in Charles Tilly, e d . The
Formation of National States in Western Europe (Princeton: Princeton University Press, 1975); John A.
Hall, e d . States in History (Oxford: Basil Blackwell, 1986); Francis Fukuyama, State-Building:
Governance and World Order in the Twenty-First Century (Ithaca: Cornell University Press, 2004);
Aidan Hehir and Neil Robinson, e d s . State-building: Theory and Practice (London: Routledge, 2007).

98
On state functions, see Charles Tilly, "War Making and State Making as Organized Crime," in Peter
Evans, Dietrich Rueschemeyer, and Theda Skocpol, e d s . Bringing the State Back in (New York:
Cambridge University Press, 1985); Fukuyama, State-Building-, Wang Shaoguang, "Democracy and
State Effectiveness," in Natalia Dinello and Vladimir Popov, eds. Political Institutions and
Development: Failed Expectations and Renewed Hopes (Cheltenham, UK: Edward Elgar, 2007).

99
This is not the same as saying that leaders in all countries always seek to pursue state-building. As
forcefully argued by Joel Migdal, state leaders in certain Third World countries have at time
deliberately weakened - not strengthened - certain state agencies and associated institutions, with an
eye to prevent any agencies from becoming new centers of power threatening their own political
survival. See Migdal, Strong Societies and Weak States, esp. Chapter 6. See also his State in Society:
Studying How States and Societies Transform and Constitute One Another (Cambridge: Cambridge
University Press, 2001), esp. Chapter 3.

77
constructing the sociopolitical cohesion of a country by cultivating (if not inventing) a

shared identity, collective memory, and common socio-cultural bonds among

constituent communities, for the ultimate goal of holding a "nation" together.100 As

noted by historian Wang Gungwu, while nation-building had not been a major issue

for many Western European countries who already came to see themselves as "self-

conscious nations" by the end of the eighteen century, the process is more problematic

and, indeed, artificial in other parts of the world.101 This is particularly so for the

post-colonial new "nations" and immigrant countries, where people of different ethnic

and religious backgrounds came to live together within certain politically-drawn

boundaries. 102 Benedict Anderson, in his seminal work on nationalism, describes

nations as "imagined communities", with people perceiving and imagining themselves

as part of a nation that "has finite, if elastic, boundaries, beyond which lie other

nations." 103 In that sense, nation-building is essentially a constructed rather than a

predetermined process.

While state-building and nation-building are two distinctive terms, they are

inextricably intertwined. 104 A well functioning state is a sine qua non for effective

nation-building. This is because efforts to foster national integration and cohesion will

always demand a functioning state capable of performing its basic tasks for its

100
See Karl W. Deutsch and William J. Foltz, eds., Nation-Building (New York: Atherton Press,
1963).
101
Wang Gungwu, ed., Nation-Building: Five Southeast Asian Histories (Singapore: Institute of
Southeast Asian Studies, 2005); Wang Gungwu, "Chinese Ethnicity in New Southeast Asian Nations,"
in Leo Suryadinata, ed., Ethnic Relations and Nation-Building in Southeast Asia (Singapore: Institute
of Southeast Asian Studies, 2004), pp. 1-19.

102
Nicholas Tarling, Imperialism in Southeast Asia (London & New York: Routledge, 2001), esp.
Chapter 8 "Legacies", pp. 285-97. See also Chan Heng Chee, Nation-Building in Southeast Asia: The
Singapore Case, ISEAS Occasional Paper No. 3 (Singapore: Institute of Southeast Asian Studies,
1971); Seymour Martin Lipset, The First New Nation: The United States in Historical and
Comparative Perspective (Edison, NJ: Transaction, 2003).

103
Benedict Anderson, Imagined Communities: Reflections on the Origin and Spread of Nationalism
(London: Verso, 1983/2006), p. 7.
104
Anthony D. Smith, "State-Making and Nation-Building," in Hall, States in History, pp. 228-63.

78
citizens. No nation-building is possible if the state fails to steer direction, extract

resources, regulate domestic life, and redistribute growth in an efficient and fair

manner.

The success or failure of a nation-building exercise, in turn, will affect the

level of state-building. A more successful nation-building project (e.g. in Singapore,

Switzerland, and Norway) is more likely to strengthen a country's internal resilience,

largely by freeing up resources and shoring up the state's capacity for governmental

and developmental tasks. In his study of Norway, Harry Eckstein attributes the

governmental stability and high performance of the state to the constancy of "social

solidarity" or a "sense of community" among the people.105 By contrast, a failed

nation-building (like in Sri Lanka, Sierra Leone, and Sudan) is likely to divert and eat

up resources that could have been used for state-building and development purposes.

Worse, it may aggravate intergroup tensions which then escalate into prolonged

internal conflicts. Azar and Moon observe that the "failure to integrate diverse social

groups into a unified political force brings about new security threats, fragments

macropolitical infrastructures, and weakens policy capacity."106 They opine that the

integration problem is particularly prevalent in the Third World: "Many developing

countries still suffer a colonial legacy by which diverse communal (ethnic, linguistic,

religious, and cultural) groups were forced to merge into a single territorial and

administrative body. Ironically the tide of modernization has accelerated the process

of communal fragmentation, elevating integration as a unique and important

107
dimension of the Third World national security management."

105
Harry Eckstein, Division and Cohesion in Democracy: A Study of Norway (Princeton, NJ: Princeton
University Press, 1975).

106
Edward E. Azar and Chung-In Moon, "Legitimacy, Integration and Policy Capacity: The 'Software'
Side of Third World National Security," in Azar and Moon, eds. National Security in the Third World:
The Management of Internal and External Threats (Hants, England: Edward Elgar, 1988), p. 79.
107
Ibid.

79
 State- and nation-building are significant for smaller states, in that the

processes will dictate the states' capacity to protect their security, economic, and

political interests in three critical ways. First, an internally cohesive and resilient

nation with well functioning governance institutions is more likely than a divisive and

weak state to reduce the possibilities of internal conflict and external exploitation, as

well as to mitigate the effects of structural shocks. In that sense, nation- and state-

building can be viewed as the "first line of defense" for small-states' risk

management.

Second, a more successful nation- and state-building effort will enable small

states to reduce their dependency on external assistance, which, in turn, will enhance

their leverage to bargain and maximize the benefits from their linkages with big

powers, regional countries, and international institutions. This is so because a state

that is internally strong and united is more likely than a divided and failed state to

devote a larger proportion of its resources to the task of finding ways to promote its

external interests. This is likely to allow the state to develop a wider range of policy

alternatives. The more alternatives one possesses, the less dependent one becomes,

and the greater the bargaining power one will enjoy vis-a-vis the external actors.

Glenn Snyder, in his analysis of alliance management, observes that "greater

bargaining leverage will accrue to the party that is least dependent on the alliance",

and that because the less dependent party "can tolerate the risk of alliance dissolution

better than their partners, they need not so carefully tailor their policies to suit the

partners' wishes." 108 This will help small states to elude political subordination,

while retaining a degree of policy maneuverability.

Finally, smaller countries who possess a higher level of state capacity and

social cohesion are more likely (than those who are internally weak and/or divided) to

108
Snyder, "Alliance Theory," pp. 93-4.

80
be more capable of diversifying their economic base and politico-strategic linkages.

For instance, Singapore's ability to steer and capitalize on its diverse but relatively

stable communities to establish strong ties with the emerging markets in China, India

and Middle East - while maintaining its traditional markets in the developed countries

- has served to transform the country's socio-cultural features into commercial and

strategic assets that have proved to be valuable for the city-state. This shall be

discussed in Chapters 6 and 8.

Economic diversification

This is a policy in which a state seeks to mitigate the risks of cyclical volatility in the

world economy by constantly developing new engines of growth and by diversifying

its export markets and sources of production factors. It is implemented mainly

through industrial and development policies, which include foreign direct investment

(FDI) strategies, export promotional activities, research and technology development

programs, tax and fiscal incentive schemes, as well as trade related measures.109

Economic diversification will have direct implications for smaller states'

external postures. The need to diversify their export destinations and sources of

production factors provide strong incentives to smaller states to promote regional

integration and intra-regional cooperation, to pursue prosper-thy-neighbor policy, and

to explore economic opportunities in big and/or emerging markets around the globe. It

will particularly require them to develop close economic ties with big powers, in order

to tap into as many and as large sources of capital, technology and markets as

possible. In general, the more diversified and extensive a state's economic linkages

have become, the lower the risks of over-dependence on a narrow range of external

conditions, and the better the state is positioned to cope with economic vulnerabilities.
109
See Peter J. Katzestein, Small States in World Markets (Ithaca, NY: Cornell University Press,
1985); John Weiss, Industrialisation and Globalization: Theory and Evidence from Developing
Countries (New York: Routledge, 2002).

81
 In the context of small states-big power relations, economic linkages often

entail a strategic dimension. This is because the creation and maintenance of

economic ties tend to offer smaller states with certain "neutral" yet regularized

channels of communication with a big power, which can be of crucial importance in

circumstances where bilateral political and diplomatic relations are absent, strained, or

difficult. A perfect example was ASEAN states' relations with China during the Cold

War. As will be discussed in Chapter 6, despite the absence of diplomatic ties and

despite their lingering ideological and political problems with the neighboring giant at

that time, the smaller actors had all moved to establish direct commercial linkages

with Beijing. Such linkages provided the smaller states with a pragmatic and

politically less sensitive channel to interact with what was then seen as the largest

threat to their security, thereby planting the seeds for normalization when political

barriers were removed in the later years.

Economic linkages may assume strategic importance in many other ways.

These include, for instance: (a) when a smaller state's economic cooperation with a

big power involves certain resources or stakes that are deemed crucial for the big

power's pursuit of strategic goals; (b) if regional economic cooperation has evolved in

such a way that a development on one side will considerably affect the performance

of the other; and (c) if the economic linkages have intensified to the extent that the big

power begins to see a major stake in preserving the regional status quo.

Its importance notwithstanding, economic diversification will only help

smaller states to mitigate, but not eliminate, their inherent limitations. This is partly

because there will always be cyclical downturns in the global economy, and partly

because unlike big powers who are more capable of withstanding risks by finding

ways to stimulate their domestic demand and to develop new economic growth

engines, smaller states' own markets and resources are simply not sizeable enough to

82
perform such tasks. Hence, unless they manage to augment their own efforts with

certain external mechanisms like regional integration, smaller states can never hope to

cope with the challenge of economic volatility in an effective and sustainable manner.

Strategic Choice

Strategic choice - or strategic orientation - is about the manner in which a state

chooses to prioritize its goals, mobilize its assets, and orients itself in the international

system. It includes, but is not confined to, how a state positions itself to the key actors

of the system, i.e. the big powers, neighboring countries, and international

institutions.110 This conception is based on two basic assumptions: first, a state's

external relations are not a "given" or "natural" phenomenon, but a product of

deliberate policy choices by its leaders to pursue certain politico-strategic ends;111

and second, in international relations, a state's choice of position is a source of foreign

policy assets that can be used to bargain for benefits like security guarantee, economic

returns, prestige, and maneuverability.

In specific terms, a state's strategic choices can be observed (and compared

across countries and over time) by: (a) its prioritized goals (e.g. protecting itself from

a security threat, preserving internal order and territorial integrity, promoting

110
This study makes a distinction between "strategic choices" and other external policy options like
alliances and institutionalized cooperation, chiefly because the former is an internal or homegrown
effort, whereas the latter is external arrangements, which, once come into existence, would tend to
reduce the margin of maneuverability for smaller actors, either due to the particularistic interests of
stronger partners, or due to institutional requirements of multilateral settings.

111
The fact that many countries have often invoked the notions of "special" relationships, "natural"
allies, "traditional" friends, and "strategic" partners to describe their bilateral ties with certain countries
is an indicator that states tend to give more priority to certain sets of external relations over the others.
Many factors may have come into play. Among the major ones are: kinship identity, socio-cultural
affinities, historical ties, leaders' charisma, geopolitical imperative, ideological identification, power
attraction, economic interdependence, institutional affiliation, positional solidarity, etc. While most of
these factors are objectively existent, their impact on state's positioning choices is far from given ex
ante. This is evidenced by the fact that each of these factors - e.g. cultural affinity and ideological
similarity - may contribute to sources of enmity as much as sources of amity; and that some countries
have at times chosen to emphasize but at times chosen to downplay the very same "special"
relationship. This suggests that external relations are largely a choice of strategic orientation, and that
the manner in which a state comes to position and prioritize a particular set of bilateral relations are not
entirely a "natural" phenomenon; rather, it may have more to do with the country's political and
strategic needs at a given time.

83
domestic development and economic growth, and, in the case of the larger powers,

expanding influence, exporting ideology, perpetuating its preponderance, and/or

pushing for a change in regional or international order); (b) the cornerstone of its

external policy (centering on alliances, focusing on institutionalized cooperation,

placing roughly equal emphasis on both, or relying on unilateral action); and (c) its

alignment choices (whether or not it takes sides among the big powers; how close and

how far does it choose to position itself vis-a-vis individual powers; with whom and

over which sectors does it choose to align, etc).

A change in a state's strategic orientation can be said to have occurred

whenever there is a discernable shift in any or all of the above elements. Such a

change has been variously described as a "new direction", "restructuring",

"realignment", "dealignment", "re-prioritization", or "reorientation" in foreign

policy. 112 A country, for example, may choose to abandon its earlier policy of relying

on a big power-led alliance, and re-position itself by projecting a "neutralist" posture

and by prioritizing its relations with neighboring countries and regional institutions as

the cornerstone of its foreign policy (e.g. Malaysia since the early 1970s, Vietnam

since the early 1990s). Or a country may make a subtle adjustment to its earlier "non-

alignment" stance, and opt to move closer to a superpower (Singapore since the

1980s). In a more dramatic fashion, a country may choose to switch camps, moving in

and out different power blocs. A case in point is the People's Republic of China

(PRC)'s alignment positions during the Cold War, which shifted from "leaning-to-

one-side" (joining the Soviet camp) in the 1950s to "dual-adversary" (simultaneously

112
See, for instance, K.J. Holsti, Why Nations Realign: Foreign Policy Restructuring in the Postwar
World (London: Allen & Unwin, 1982); Charles F. Hermann, Charles W. Kegley, Jr. and James N.
Rosenau, eds., New Directions in the Study of Foreign Policy (Boston: Allen & Unwin, 1987); Mary
Kaldor and Richard Falk, Dealignment: A New Foreign Policy Perspective (Oxford: Basil Blackwell
for The United Nations University, 1987); Kjell Goldmann, Change and Stability in Foreign Policy
(Princeton: Princeton University Press, 1988); Charles F. Hermann, "Changing Course: When
Governments Choose to Redirect Foreign Policy," International Studies Quarterly 34, pp. 3-21; Jerel
A. Rosati, Joe D. Hagan, and Martin W. Sampson III, eds., Foreign Policy Restructuring: How
Governments Respond to Global Change (Columbia, SC: University of South Carolina Press, 1994).

84
confronting the two superpowers) in the 1960s, and then from keeping the "one-front"

strategy (tilting toward the U.S. to countercheck the Soviets) in the 1970 to

maintaining a relatively independent position since the early 1980s.

Changes like these are often a result of both external and internal factors. The

external factors may include a shift in the distribution of capabilities across the big

powers, an improvement or deterioration in the inter-great-power relations, and a

decline or increase in a patron's commitment. The internal factors may include a

change in leadership, a change in threat perception, a need to meet the changing

demands of new socioeconomic forces, and an imperative of the ongoing state- and

nation-building processes. I will return to this in Chapters 5 to 8.

Strategic choice is important because it fundamentally determines whether and

to what extent a state could turn its physical resources and ideational attributes into

policy assets that can be mobilized to enhance its bargaining leverage vis-a-vis the

external actors. These include: geographical features (location, landscape, and

resource endowment); historical and socio-cultural factors (e.g. colonial legacies,

cultural traits, demographic and social structures); political system and state-society

relations; economic, industrial, and technology structure; military potential;

"traditional" linkages with certain external actors; memberships in international

institutions; as well as the material and intellectual capabilities to play a regional

leadership role (in articulating ideas, promoting initiatives, and institutionalizing

principles and arrangements). 113

113
See, for instance, Halford Mackinder, "The Geographical Pivot of History," Geographical Journal
23:4 (1904), pp. 421-37; Nicholas J. Spykman, The Geography of the Peace (New York: Harcourt,
Brace & Co., 1944); Hans W. Weigert et a l . Principles of Political Geography (New York: Appleton-
Century-Crofts, 1957), esp. 174-290; Harold and Margaret Sprout, Foundations of International
Politics (Princeton: D. Van Nostrand, 1962); Friedrich Ratzel, "The Laws of the Spatial Growth of
States," in Roger E. Kasperson and Julian V. Minghi e d s . The Structure of Political Geography
(Chicago: Aldine, 1969), pp. 17-28; Klaus Knorr, Military Power and Potential (Princeton: Princeton
University Press, 1970); Michael Howard, "The Forgotten Dimensions of Strategy," Foreign Affairs
57:5 (Summer 1979), pp. 975-86; Barry R. Posen, The Sources of Military Doctrine (Ithaca: Cornell
University Press, 1984); Ken Booth and Russell Trood, e d s . Strategic Cultures in the Asia Pacific
Region (London: MacMillan, 1999); John J. Mearsheimer and Stephen M. Walt, The Israel Lobby and

85
 At issue is: in what way will a state's strategic choices - in prioritizing its

goals, in mobilizing its assets, and in aligning its position - affect its bargaining

ability to deal with the external actors, particularly the big powers? This issue is

especially critical for smaller states, not least because of their innate limitations in

terms of resources and capabilities.

To a small state, getting the right priorities and making use of its most valued

assets vis-a-vis the big powers are important not only in their own rights, but also

because they serve to demonstrate its worth to a particular power. This is a key aspect

in all bargaining process. In general, the higher the value and irreplacability of a

smaller state's possession (e.g. strategic location, critical resources, information,

unique role in regional institutions, complementary military assets, etc) to a big

power, the higher the bargaining strength of the state vis-a-vis the power. Arnold

Wolfers writes: "To bolster the strength of small countries may prove difficult at

times; but there are several ways in which it can be done. Their own military

preparedness is not the least important means, even though, taken by itself, it must

necessarily remain inadequate. If they are to get any help from outside, the small

states must be expected to make a contribution to their own defence proportionate to

their man power and resources." 114 Put differently, in order to boost its bargaining

power and maximize its desired benefits from an external actor, a smaller state must

first make efforts to show its worth and importance to the latter.

Alignment choice is another key factor that may affect a smaller state's

bargaining strength. All things being equal, maintaining too close a relationship with a

single big power is likely to leave the smaller state with the least bargaining leverage.

This is because without any alternative power that may serve as a countervailing force

U.S. Foreign Policy (New York: Farrar, Strauss and Giroux, 2007).

114
Wolfers, "In Defense of the Small Countries," p. 212.

86
to check on the big power, the smaller actor will have to face the problems of power

disparity on its own. By contrast, keeping a roughly equal relationship

("equidistance") between two or more competing powers is likely to favor a smaller

state with the highest bargaining strength. This is because competition among the big

powers is likely to increase their willingness to make concessions to the smaller

actors, either to win the latter over to their side, or to prevent them from joining the

opposing camp. While equidistance is often the most desirable choice for smaller

states, it is however not always feasible. It requires certain antecedent conditions. This

issue will be dealt with in the next chapter, when I proceed to discuss the major types

of smaller states' alignment choices vis-a-vis the great powers.

Here, suffice it to emphasize that smaller states would generally prefer to

avoid choosing sides or aligning too closely with a single power, unless their security

is directly threatened, and/or they have no other alternatives to turn to, as noted.

Indeed, even at the height of the Cold War when alliances and alignments were the

dominant theme of international politics, there were many smaller states who opted

for a "neutralist" or "non-alignment" position. 115 According to Laurence Martin,

neutralist policies may be motivated by a wide variety of goals. In his own words, the

policies "may be designed to preserve newly won independence, either by isolation or

by activist policy of playing one great power against another, attracting aid from both,

and forestalling encroachment by either." 116 In addition, the neutralist position -

either as a policy or as a posture - is also valuable to smaller states in that it is

something the big powers will at least tolerate, if not embrace. In assessing ASEAN's

role during the Cold War period, former Malaysian foreign minister Ghazali Shafie

notes that "the very strength of ASEAN lies in its non-ideological, non-military and

115
Eft-aim Karsh, Neutrality and Small States (London and New York: Routledge, 1988); Crabb, The
Elephants and the Grass.

116
Martin, Neutralism and Nonalignment, p. xii.

87
non-antagonistic character. If it were to cease to be like this, its acceptability quotient

regionally and internationally would drop substantially."117

Despite these benefits, neutralist and non-alignment policies - like other types

of strategic choices - have their downside. While the position may help smaller states

to protect their autonomy, preserve their freedom of action, diversify their sources of

aid, and reduce the risk of being dragged into great-power conflicts, these benefits

necessarily entail the opportunity cost of foregoing security guarantee as well as

certain economic and strategic benefits that could have been acquired from a big-

power-led alliance. George Liska thus writes: "a free hand might come to mean an

empty and unarmed hand." 118 Worse, a position of avoiding taking sides might run

the risk of alienating both sides. Niccolo Machiavelli thus notes:

A prince will also be well thought of when he is a true friend or an honest enemy, that
is, when, without any hedging, he takes a stand for one side and against another. It is
always better to do this than to stand on one's neutrality; because if two of your
powerful neighbors come to blow, they are either such people that you have to fear
the winner, or they are not. In either case, it will be better for you to assert yourself
and wage open war; because, in the first case, when you do not take sides, you are
bound to be the prey of the winner, to the pleasure and satisfaction of the loser. Then
you have no excuse, nothing to defend you, nobody to take you in; a winner has no
use for doubtful friends, who would not support him in adversary, and a loser will not
take you in because you were not willing to take your chances with him, sword in
hand.119

Moreover, the success or failure of nonalignment is very much subject to the stability

of the inter-great power relations, which is simply beyond the control of small states.

To sum up, these three pillars of internal efforts are mutually reinforcing. A more

successful state- and nation-building process, for instance, will boost a smaller state's

capacity for both economic diversification and strategic orientation. At the minimum,

the process will serve as the first line of defense to reduce the risks of internal troubles

117
M. Ghazali Shafie, Malaysia: International Relations (Kuala Lumpur: Creative, 1982), p. 229.

118
Liska, Alliances and the Third World, p. 20.

119
Niccolo Machiavelli, The Prince, 2nd edition, translated and edited by Robert M. Adams (New York
& London: W.W. Norton, 1992), pp. 61-2.

88
and external exploitation; at the maximum, it will enhance the state's effectiveness to

tap into external assistance, as well as to more fully transform its resources and socio-

cultural assets into economic and strategic opportunities. Economic diversification, on

the other hand, will help to strengthen the state- and nation-building processes. This

will occur if the state's efforts to diversify the country's export markets and economic

structure have resulted in a more equitable distribution of growth across communities

and areas. Moreover, economic diversification also tends to support a state's strategic

orientation efforts, either by supplying more material and financial resources to

expand the state's external linkages, or by providing a politically less sensitive

platform to develop certain bilateral relations that are otherwise more difficult to

initiate. Finally, strategic orientation will likewise serve to advance the other two

pillars of internal efforts. For example, by displaying and making clear its position to

engage with, rather than to confront a big power, such a strategic move is likely to

enable the country to develop a closer, more comprehensive, and more interlocking

economic relationship with the power, thereby advancing its economic diversification

endeavors. In certain context and at a certain juncture, an adjustment in a state's

external posture may also help to hasten its internal state- and nation-building

processes. An example in point was the Malaysian Prime Minister Tun Razak's move

in the early 1970s to abandon the country's anti-China policy and normalize relations

with China, which helped resolve the nationality issue for many local Chinese. Such

developments not only clarified the status of the sizeable ethnic minority within

Malaysia political life, but also had the effect of placating the Chinese community as

well as ameliorating Malay-Chinese relations in the wake of the racial riots in 1969

and the consolidation of Malay political power after the launching of the New

Economic Policy (NEP) in 1971.120 I will return to this in Chapter 6.

120
See Shafruddin Hashim, "Malaysian Domestic Politics and Foreign Policy: The Impact of

89
 Conclusion:
Trade-offs in Smaller States' Policy Options

The preceding discussion has suggested that, while smaller states must enlist external

assistance - most notably military alliances and institutionalized cooperation - to

compensate for their inherent weaknesses, this does not mean that their internal

efforts are unimportant. Although smaller states' internal efforts by themselves are

hardly sufficient to safeguard their interests in the international system, these

endeavors are necessarily an integral part of their survival strategy. Internal efforts are

crucial for smaller states in part because external actors are uncertain (big powers may

come and go; institutions may float or sink), and in part because they will prevent

smaller states from becoming over dependent on external forces.

More significantly, the discussion in this chapter has also indicated that there

are trade-offs involved in each of the three policy options, and that none of them may

independently mitigate all three facets of the trinity of risks for smaller states. Of the

three policy goals that smaller states typically seek to pursue - security and freedom

from military threat, prosperity and freedom from economic deprivation, sovereignty

and freedom from autonomy infringement - only two can be attained by a single

approach. Put differently, the nature of the trinity is such that a smaller state cannot

hope to rely on one single policy to alleviate all three risks at a single time. In fact,

regardless of the policy approach adopted, a smaller state's attempt to use that

approach to mitigate certain risks will inevitably expose it to other forms of danger.

Take alliance - the option most emphasized by realists. As mentioned, while

aligning militarily with a big power will allow a smaller state to reduce security risks

and make economic gains (through developmental aid and taking advantage of the

Ethnicity," in Karl D. Jackson, Sukhumbhand Paribatra, and J. Soedjati Djiwandono, eds, ASEAN in
Regional and Global Context (Berkeley: Institute of East Asian Studies, University of California,
1986), pp. 155-62. Also J. Saravanamuttu, The Dilemma of Independence: Two Decades of Malaysia's
Foreign Policy, 1957-1977 (Penang: Penerbit Universiti Sains Malaysia for School of Social Sciences,
1983), esp. pp. 92-140.

90
security umbrella to concentrate on its own domestic development), it will

nonetheless expose the state to various forms of political risks (erosion of autonomy

and loss of freedom of maneuver). Institutionalized cooperation, on the other hand,

despite its virtues of enhancing a smaller state's capacity to pursue the dual goals of

prosperity (increasing and diversifying its trade opportunities and sources of

economic assistance) and autonomy (reducing the possibility of becoming over

dependent on a single external power), has the downside of not being able to provide

effective security measures. Finally, while self-strengthening efforts may help a

smaller state to diversify and sustain its politico-strategic assets, the endeavors by

themselves will not be sufficient to compensate or cope with its inherent economic

vulnerabilities.

Such trade-offs are illustrated in Figure 2.1 below. In the next chapter, I will

elaborate on how these trade-offs will have an impact on smaller states' alignment

choices.

Figure 2.1:
The Trinity of Risks and the Smaller States' Policy Options
Security Risks

Key:
Option to mitigate risks

91
 CHAPTER 3

THEORIZING SMALLER STATES'

ALIGNMENT CHOICES:
BALANCING, BANDWAGONING, AND "HEDGING

"In this vastly shrunken world, small nations must accept the fact of great powers'
influence and even manipulation. Like the sun, the great powers will by their very
existence radiate gravitional power. But if there are many suns, then the smaller
planets can, by judicious balancing of pulls and counter pulls, enjoy a greater freedom
of movement and a wider choice of options than if they had only one sun around
which to revolve. The alternative to one power dominance of the region is free and
peaceful competition by a multiplicity of powers. It is good for the great powers. It is
good for nimble footed small nations who understand the game."
S. Rajaratnam, Foreign Minister of Singapore,
Asia Society, New York, September 27, 1973

"When two elephants fight, the grasses suffer; and when the same two elephants
make love, the grasses also suffer."
An African and Asian Proverb

In the first two chapters, I have used the "trinity of risks" framework to describe the

types of problems (i.e. security, economic, and political risks) characteristically faced

by smaller states. I then elucidated three categories of policy options which smaller

states would turn to in order to grapple with the problems. These policy options are:

alliances, institutionalized cooperation, and internal efforts. After explicating the

benefits and drawbacks of each of these options, I argued that the nature of the trinity

is such that no state can hope to rely on one single policy option to reduce certain

risks without exposing it to other types of problems. It is due to such policy trade-offs

that most smaller states have sought to combine all three policy options - albeit with

different emphasis and details - in their struggles to cope with the problems of power

asymmetry.

In this chapter, I seek to examine how the policy dilemmas embedded in the

trinity of risks might affect smaller states' alignment choices vis-a-vis the great

92
powers, specifically within the context of the growing power of a giant neighbor.

This chapter consists of three major parts. The first section explains why I

choose to focus on "alignment choices", rather than "alliance choices" which have

received far more attention from scholars of International Relations (IR). The second

section reviews two mainstream schools of thought that have long dominated the

scholarly debate on alignment behavior: i.e. "balancing" and "bandwagoning". I argue

that contrary to what is implied in the balancing-bandwagoning debate, smaller states

often do not have to choose between these two approaches. Such military-based

approaches - because of the political drawbacks they entail - are rarely regarded as

the first choice by smaller states. Rather, they will prevail only under certain specific

conditions, like when a smaller state is threatened by an immediate security risk. In

other circumstances where the sources of dangers and opportunities are far from

certain and straightforward, smaller states are likely to eschew balancing and

bandwagoning, and opt for "equidistance" and "mixed strategies" vis-a-vis the major

powers. "Hedging" is one manifestation of such strategies. The third section defines

and delineates the term "hedging" as an alignment choice in international relations.

Why "Alignment Choices"?

Before discussing the types and causes of state alignment choices, it is necessary to

make some conceptual clarifications. What do we mean by "alignment"? Why make a

distinctive between "alignment" and "alliance", which have been used as synonyms in

the literature of IR?

Following the works by K. J. Holsti and Glenn Synder, this study considers

"alliances" as a subset to the broader phenomenon of "alignments."1 The former is

1
K.J. Holsti, Why Nations Realign: Foreign Policy Restructuring in the Postwar World (London:
George Allen & Unwin, 1982); Glenn H. Synder, Alliance Politics (Ithaca: Cornell University Press,
1997). Holsti's study is concerned with how and why governments decide to "reorient" their foreign
policy. He uses "foreign policy realignment", "foreign policy restructuring", and "foreign policy

93
referred to as military alignments, whereas the latter is defined as the configurations

and reconfigurations of interstate relations that are shaped by the ever-shifting

distribution of power in the international system and the ever-changing interests of

state actors. Accordingly, alliance choices are about a state's decisions to enter into or

break away from a military alignment, whereas alignment choices about a state's

decision to maintain or adjust its pattern of relations with the great powers, as part of

its efforts to respond to the major changes at the international and domestic levels.

By this conception, alliance formation is only a part and not the whole of a

state's alignment behavior, which also encompasses all forms of diplomatic

rapprochements, political partnerships, as well as functional and economic

collaboration between the state and other countries, particularly the power centers or

power poles of the international system. According to Glenn Synder, "Alignment

includes alignment 'against' as well as 'with'; it identifies potential opponents as well

as friends." 2 He then adds: "Alignments, whether or not they have been formalized as

alliances, are essentially expectations in the minds of statesmen about whether they

will be supported, opposed, or ignored by other states in future interactions."3

Alignment choice, hence, is a state's expectation about its external relations. It is

about how a state chooses to position itself vis-a-vis the major actors, with the

expectation of maximizing its margin of maneuverability in the anarchical world.

There are reasons why this study adopts the broader notion of alignment

choices - rather than the narrower sense of alliance choices - as a conceptual tool to

analyze the responses of smaller states toward a rising power.

reorientation" interchangeably, by which he refers to "a type of foreign policy behavior where
governments seek to change, usually simultaneously, the total pattern of their external relations" (p. 2)
- i.e. "the patterns of externally directed diplomatic, cultural, commercial and military relations" (p.
12).

2
Synder, Alliance Politics, p. 6.
3
Ibid, p. 21.

94
 To begin with, "alignment choices" is a much more accurate term to describe

and capture the range of policy options for smaller states. It leads us to look beyond

military means, and to pay more attention to the various non-military approaches that

are available for smaller states to deal with the great powers. Military alliances, after

all, are not the only way in which a smaller state could align against or align with a

big power. A smaller state, for instance, may choose to align against (to oppose and to

countercheck) a neighboring giant in non-military ways - by strengthening its

political and diplomatic linkages with the giant's rivals but stop short of forging

military alliance with any of them. Or it may choose to align with its giant neighbor

by moving closer and strengthening the bilateral ties in political, economic, and

functional areas, but without entering into military alliance with the giant. The role of

such non-military approaches will be elaborated later (especially in Chapters 5-8). For

analytical convenience, I shall categorize these approaches into two genres, namely:

(a) political alignment: these may manifest in various forms and in different degrees,

ranging from reconciliations and mutual recognition of each other's core interests, to

reciprocal exchanges of deference, to growing convergence of worldviews, and to

increasing coordination of foreign policy actions; and (b) functional alignments: these

may take the forms of "low politics" cooperation, which include collaboration in

trade, investment, development, socio-cultural exchange, environment, public health,

etc. Political and functional alignments may over time evolve into military

alignments, but this process is by no means linear or inevitable.

While military alignments are a linchpin of security policy for many countries,

a smaller state's political and/or functional alignments - i.e. its decision to move

closer to (or away from) a particular big power(s) in political and functional areas -

can play an equally or even more important role in improving the state's external

security environment. Take the example of Southeast Asian-China relations. In the

95
early 1970s, in the light of reduced strategic commitments from the West following

the British "East of Suez" policy and the Nixon Doctrine, the smaller states in

Southeast Asia had to reassess their positions in order to grapple with the challenge of

facing the communist powers. Their responses were political andfunctional - rather

than military - in nature. That is, all of them (with the exception of Indonesia) had

moved to reconcile with China. They did so first by forging direct commercial ties

with the giant, and then by establishing diplomatic ties and/or making high level visits

to Beijing. This alignment adjustment set the tone for the future development of

Southeast Asia-China relations, at least until the Cold War ended.

A similar pattern of state responses emerged in the early 1990s. In the wake of

the drastically altered security environment following the end of the East-West

confrontation and the reduction of superpower presence in the region, the Southeast

Asian states were once again compelled to make adjustments in their relations with

the great powers. Their responses toward China, again, were more political than

military. In addition to upgrading their respective bilateral ties with Beijing, the

smaller states have also been making concerted efforts to engage China through the

region's burgeoning multilateral institutions. Together, these bilateral and multilateral

political efforts have served as the cornerstone of the states' China strategies

throughout the post-Cold War era. Although the states do choose to simultaneously

maintain some loose form of military cooperation with the Western powers (as will be

discussed below), these military endeavors constitute only a part and not the whole of

their overall strategies in the new era.

In short, these examples suggest that smaller states' policy options are not

confined to military approaches; and that political and functional alignments - either

working in conjunction with military alignment or on their own - often make up an

integral part of small states' strategies vis-a-vis the great powers. Ignoring this

96
important dimension will result in an incomplete picture of the phenomenon.

Another reason why this study adopts the broader conception of alignment

choices is that, the term serves to enrich and refine our understanding about the

dynamics of the balance ofpower. As observed by T.V. Paul et al., "Balance of power

dynamics are supposed to operate at different levels and in different areas of state

interaction, including the economic and military realms, although the latter dimension

has received the most attention [italics added]." 4 Alignment choices, by highlighting

both the military and non-military dimensions of state strategies, lead us to

comprehend the balance of power beyond the traditional military terms. As shall be

demonstrated throughout the study, in contrast to conventional wisdom, balance of

power is not all about alliance formation; rather, the policy can be pursued through

other mechanisms as well. Chief among them is the formation of multilateral

institutions that allow small states to align politically with different big powers. These

norm-based institutions put smaller states in a unique position to leverage on their

links with various centers of power, which, in turn, will serve to check and restrain the

behavior of one another. 5 This indicates that the balance of power policy may be

4
T.V. Paul, "The Enduring Axioms of Balance of Power Theory," in T.V. Paul, James J. Wirtz and
Michel Fortmann, eds., Balance of Power: Theory and Practice in the 21st Century (Stanford: Stanford
University Press, 2004), p. 5.

5
The idea that international organizations and multilateral institutions may serve as an avenue for the
balance of power policy can perhaps be traced back to Quincy Wright, who observed in 1942 that "a
stable balance of power has not been able to exist without at least a modicum of international
organization", and that "in the future, effective international organization may prove to be an essential
condition for either a stable balance of power or international law." See Wright, A Study of War
(Chicago & London: The University of Chicago Press, 1942/1964), p. 135 & p. 120, respectively. This
idea has subsequently been further explored by scholars in both International Relations and area
studies. Michael Leifer, for instance, describes the ASEAN Regional Forum, a regional multilateral
institution in Asia Pacific "as a valuable adjunct to the workings of the balance of power in helping to
deny the dominance to a rising regional power with hegemonic potential", and that "it is more realistic
to regard the Forum as a modest contribution to a viable balance or distribution of power within the
Asia-Pacific by other than traditional means [emphasis added]." See Leifer, The ASEAN Regional
Forum: Extending ASEAN's Model of Regional Security, Adelphi Paper no. 302 (London: Oxford
University Press for IISS, 1996), p. 57. Khong and Emmers have argued along a similar line. See
Yuen-Foong Khong, "Evolving Regional Security and Economic Institutions," Southeast Asian Affairs
1995 (Singapore: Institute of Southeast Asian Studies, 1995), pp. 289-300; and Ralf Emmers,
Cooperative Security and the Balance of Power in ASEAN and the ARF (London: RoutledgeCurzon,
2003).

97
operated through two different mechanisms, namely alliance-formation and

institution-formation. These mechanisms are not mutually exclusive, but are often

implemented hand-in-hand, either to complement or to counteract the effects of one

another. I will return to this theme later. Here, it is sufficient to note that a broadened

conception of alignment choice is essential to better reflect the multiplicity of the

balance of power dynamics.

This calls for a review of the literature on the balancing and bandwagoning

behavior - two of the most widely discussed types of alignment choices available to

smaller states for promoting balance of power.

Smaller States' Alignment Choices and the Dynamics of the Balance of Power:
Beyond the Dualism between Balancing and Bandwagoning

What do states do when faced with an increasingly strong and/or potentially

threatening big power? For decades, mainstream IR theorists have offered two broad

answers to this central question: states are likely to either align against or align with

that power. The former constitutes a "balancing" strategy, while the latter, a

"bandwagoning" behavior. 6 These contending views are widely regarded as

competing schools of thought, which have framed and influenced the theoretical

debates about how and why states respond to power ascendancy the way they do.

Both the balancing and bandwagoning schools have their theoretical roots in

the notion of the balance of power in IR. Despite its importance as one of the most

ancient and central concepts in the field, the notion is also one of the most ambiguous

and controversial.7 Different scholars have assigned different meanings to the term.

6
Kenneth Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979); Stephen
Walt, "Alliance Formation and the Balance of World Power," International Security 9:4 (Spring 1985),
pp. 3-43; Randall Schweller, "Bandwagoning for Profit: Bringing the Revisionist State Back in,"
International Security 19:1 (1994), pp. 72-107.

7
On the definitional problems of the concept, see Ernst B. Haas, "The Balance of Power: Prescription,
Concept, or Propaganda?" World Politics 5 (July 1953), pp. 442-77; Inis L. Claude, Jr., Power and

98
Some use it to denote "a law of nature." 8 Others use it to designate "an arrangement

of affairs" where "no state shall be in a position to have absolute mastery and

dominate over the others." 9 Yet others use it to describe "an equilibrium or a roughly

equal distribution of power between two opponents", 10 or "a system of states engaged

in competitive manipulation of power relationships among themselves." 11 In his

seminal work that analyzes the multiple meanings of the term, Inis Claude observes

that balance of power sometime means equilibrium, and sometimes, "surprisingly

enough", also means "a factual situation in which competing powers are not

balanced", i.e. a condition of disequilibrium. 12 He quotes Nicholas J. Spykman: "The

truth of the matter is that states are interested only in a balance which is in their favor.

Not an equilibrium, but a generous margin is their objective. ... The balanced desired

is the one which neutralizes other states ... [emphasis added]."13 The balance of

power, accordingly, is conceived of as "the power situation, whether it be balanced or

unbalanced." 14

For the purpose of this study, the term balance of power is used in its broadest

sense to mean a foreign policy goal of maintaining a favorable distribution ofpower

that would allow a state to increase its margin of survival and improve its relative

International Relations (New York: Random House, 1962), esp. pp. 11-39; Paul et al., Balance of
Power; Richard Little, The Balance of Power in International Relations: Metaphors, Myths and
Models (Cambridge: Cambridge University Press, 2007).

8
As Jean-Jacques Rousseau observed about the states of Europe during the Renaissance: "The balance
existing between the power of these diverse members of the European society is more the work of
nature than of art. It maintains itself without effort, in such a manner that if it sinks on one side, it
reestablishes itself very soon on the other." Quoted in Randall Schweller, Unanswered Threats
(Princeton & Oxford: Princeton University Press, 2006), p. 4.

9
Emmerich De Vattel, quoted in Wright, A Study of War, p. 120.

10
Arnold Wolfers, Discord and Collaboration (Baltimore: The Johns Hopkins Press, 1962), p. 118.

11
Inis Claude, Jr., "The Balance ofPower Revisited," Review of International Studies 15 (1989), p. 77.

12
Claude, Power and International Relations, p. 14.

13
Ibid., pp. 14-5.
14
Ibid., p. 16.

99
position. The term is used in this study not as an "automatic" or "inevitable" outcome,

but as a behavioral tendency in which states actively seek to exploit the competitive

nature of power relations at the international level, with an eye to create and maintain

advantageous conditions for their external activities. As noted by Quincy Wright,

"The balance of power is not something that just happens but something that is

actively willed and maintained." 15 In addition, the term is used here to denote not

only the configuration of military power, but the distribution of state capabilities in

all key dimensions, namely military strengths as well as diplomatic, economic and

political prowess.

This alternative conception of balance of power has important implications for

the task of analyzing smaller states' alignment choices. First, the definition leads us to

make a distinction between the "balance of power" and the "balancing" strategy.

Unlike the conventional usage which usually employs the two terms interchangeably,

this study views the balance of power as a policy goal and takes the balancing

strategy as one of the multiple policy approaches through which states seek to attain

the former.

Second, unlike the conventional view which ordinarily equates the balance of

power with equilibrium, our definition suggests that states who pursue the balance of

power goal do not necessarily seek to promote equilibrium; rather, they may seek to

maintain disequilibrium if such a condition is deemed advantageous for promoting

their own interests. As observed by Inis Claude, balance of power "may operate in

such fashion as to produce and stabilize a situation of equilibrium, but it does not

necessarily do so. Some of the states which compose the system may adopt the policy

of promoting equilibrium, but this is dependent upon the exercise of judgment by

15
Wright, A Study of War, p. 118.

100
their leaders."16 It follows that in circumstances where state leaders judge that an

unbalanced power is detrimental to their survival, they will seek to restore equilibrium

and to deny others from attaining domination, either by upgrading their armament

and/or forming military alliances. This calls for a balancing strategy. But in

circumstances where leaders judge that an unbalanced distribution of power actually

helps rather than harm their pursuit of interests, they will seek to preserve

disequilibrium, either by preventing potential rivals from becoming peer competitors

(in the case of great powers),17 or by aligning with the strongest power at the regional

and/or global levels (in the case of smaller states). The latter case calls for a

bandwagoning strategy. Finally, in the more uncertain circumstances, states may

instead opt for middle and/or mixed strategies.

With this conceptualization in mind, I shall now briefly review the balancing

and bandwagoning propositions as two leading schools on state alignment choices.

The Balancing School

This school of thought argues that, when confronted by an increasingly stronger

power with growing potential to attain hegemony, states will seek to balance against

it by aligning militarily with others to form countervailing coalitions (external

balancing) and/or increasing their own defense capabilities (internal balancing).18

From the school's point of view, such balancing acts are imperative because an

unchecked and unbalanced power will pose a threat to the security of weaker actors.

16
Claude, Power and International Relations, p. 88.

17
On this theme, see Charles Krauthammer, "The Unipolar Moment," Foreign Affairs 70:1 (1990/91),
pp. 23-33; Michael Mastanduno, "Preserving the Unipolar Moment: Realist Theories and U.S. Grand
Strategy After the Cold War," in Ethan B. Kapstein and Michael Mastanduno, e d s . Unipolar Politics:
Realism and State Strategies After the Cold War (New York: Columbia University Press, 1999), pp.
138-81; John J. Mearsheimer, The Tragedy of Great Power Politics (New York & London: W.W.
Norton, 2001).

18
Waltz, Theory of International Politics. See also John A. Vasquez and Colin Elman, e d s . Realism
and The Balance of Power: A New Debate (New Jersey: Pearson Education, 2003).

101
 While the idea of balancing has a long pedigree dating back to Thucydides, the

balancing proposition is perhaps most system ically developed and articulated in

Kenneth Waltz's 1979 book, Theory of International Politics. In this classic work

(which is widely regarded as the founding text of neorealism), Waltz writes:

"Secondary states, if they are free to choose, flock to the weaker side; for it is the

stronger side that threatens them. On the weaker side, they are both more appreciated

and safer, provided, of course, that the coalition they join achieves enough defensive

or deterrent strength to dissuade adversaries from attacking. Thus Thucydides records

that in the Peloponnesian War the lesser city states of Greece cast the stronger Athens

as the tyrant and the weaker Sparta as their liberator ... [italics my own]." 19 Waltz's

argument is later refined by Stephen Walt, whose "balance-of-threat" theory asserts

that states do not balance against "the strongest power" in the system, but against "the

most threatening power." 20 Walt notes that the level of threat is a function of four

factors: (1) aggregate power; (2) geographical proximity; (3) offensive capability; and

(4) offensive intentions.21

Despite their variations, the major works on balancing share some common

assumptions about international politics. Above all, they share the postulation that the

key actors in international relations are states who, at a minimum, struggle to preserve
22

their security and, at a maximum, seek to increase their relative power. In addition,

they also share the belief that, in the absence of a central supranational authority, the

problem of power in international relations is "not a problem to be eliminated but a

19
Waltz, Theory of International Politics, p. 127.
20
Walt, "Alliance Formation and the Balance of World Power," pp. 3-43.

21
Ibid., p. 9. See also Stephen M. Walt, The Origins of Alliances (Ithaca & London: Cornell University
Press, 1987).
22
Waltz, Theory of International Politics, p. 126; Mearsheimer, The Tragedy of Great Power Politics,
pp. 12-4 & 46-8.
problem to be managed", and that "the effective antidote to power is power."

Because of these assumptions, the balancing school contends that the most

effective way to restrain stronger powers from imposing their military and political

domination over the weak is to maintain a situation in which power is balanced by

equivalent power. Haas and Whiting argue: "The ability of the potential enemy to

inflict losses and damage is ... the primary feature which induces a given interest

group to assume the attitude of restraint. On the basis of this tendency, then it may be

concluded that a rough equality of power may act as a restraining force simply

because neither side can be confident of an easy victory." 24 In order to maintain such

a rough equality of power, it is imperative for states - especially the smaller ones - to

pursue a policy of balancing, chiefly by joining alliances but also by upgrading their

own military strengths.

The above assumptions further lead the scholars of the balancing school to

caution about the dangers of disequilibrium. To quote Quincy Wright, "governments

have a tendency to struggle both for increase of power and for self-preservation. Only

if the latter tendency checks the first will all the governments continue to be

independent. Whenever one increases its relative power, its capacity to increase it

further will be enhanced. As a consequence, any departure from equilibrium tends to

initiate an accelerating process of conquest." 25 In view of the ever present dangers of

military invasion, it is only logical for states to join forces "to curb a potential

hegemon before it becomes too strong." 26 Inis Claude thus describes "equilibration"

as a "general principle of action" that has central importance as "an operational rule":

23
Claude, Power and International Relations, p. 6 & p. 42 respectively.
24
Ernst B. Haas and Allen S. Whiting, The Dynamics of International Relations (New York: McGraw-
Hill, 1956), p. 50. Quoted in Wolfers, Discord and Collaboration, p. 119 fn2.

25
Wright, A Study of War, p. 117.
26
Walt, "Alliance Formation and the Balance of World Power", p. 5.

103
"When any state or bloc becomes, or threatens to become, inordinately powerful,

other states should recognize this as a threat to their security and respond by taking
77 • •

equivalent measures, individually or jointly, to enhance their power." Historically,

this principle has been time and again put into practice by statesmen, as perhaps best

exemplified by Churchill's determination to ally with Stalin's Russia in the British

crusade against Nazi Germany. Waltz writes: "states will ally with the devil to avoid

the hell of military defeat." 28

In a nutshell, the balancing school thus contends that, driven to preserve their

own survival, states will tend to perceive a rising power as a growing threat that must

be resisted, balanced, and counter-checked by alliances and armament.

The Bandwagoning School

The bandwagoning school, by contrast, argues that states tend to align with - rather

than align against - a stronger side who displays the prospect for reaching

preeminence. It asserts that states may come to accept a subordinate role to a

dominant power, for the sake of protection (avoiding attacks) and/or payoffs
9Q

(obtaining rewards).

The early writers on bandwagoning have predominantly focused on protection

and security reasons - such as curbing a greater threat, avoiding complete defeat, or

diverting attack - as the principal motivation for the behavior. Quincy Wright is

probably the first to bring the term "bandwagon" into the lexicon of IR, when he

referred to it as one of the policies that "may promote the balance of power." He notes

27
Claude, Power and International Relations, p. 43. Emphasis added.

28
Waltz, Theory of International Politics, p. 166.

29
Walt, "Alliance Formation and the Balance of Power"; Schweller, "Bandwagoning for Profit,";
Kevin Sweeney and Paul Fritz, "Jumping on the Bandwagon: An Interest Based Explanation for Great
Power Alliances," Journal of Politics 66:2 (2004), pp. 428-49. See also Paul Schroeder, "Historical
Reality vs. Neo-realist Theory," International Security 19:1 (Summer 1994), pp. 108-48.

104
that polices like bandwagoning may be instrumental "in case the stronger in a given

war is a relatively weak state, whose strengthening is necessary to hold a more

powerful neighbor in check." 30 Arnold Wolfers has likewise stressed on security

motive, albeit in a different thread: "Some weak countries seek safety by getting on

the bandwagon of an ascending power, hoping somehow to escape complete

subjugation once their powerful 'friend' has gained supremacy."31 Robert Keohane,

while not using the term bandwagon, observes a similar phenomenon in which small

states are compelled to align with a source of security threats. Using the Warsaw

Treaty Organization as an example, he describes such an alliance pattern as "Al

Capone alliances", in that the alliance was not so much to protect the smaller states

against an outside threat "but rather against the great-power ally itself, just as, by

paying 'protection money' to Capone's gang in Chicago, businessmen protected

themselves not against other gangs but against Capone's own thugs. What happened

in August 1968 to Czechoslovakia is not so different from what would have happened

to a recalcitrant Chicago bootlegger in the 1920's." 32

Both Waltz and Walt are among those who explicitly contrast bandwagoning

with balancing behavior. Both insist that balancing is more common than
33
bandwagoning. In Walt's own words: "states facing an external threat

overwhelmingly prefer to balance against the threat rather than bandwagon with it.

This is primarily because an alignment that preserves most of a state's freedom of

action is preferable to accepting subordination under a potential hegemon. Because

intentions can change and perceptions are unreliable, it is safer to balance against

30
Wright, A Study of War, p. 136.
31
Wolfers, Discord and Collaboration, p. 124. Italics my own.

32
See Robert Keohane, "Liliputians' Dilemmas: Small States in International Politics," International
Organization 23:2 (Spring 1969), p. 302.

33
Waltz, Theory of International Politics, p. 126; Walt, "Alliance Formation and the Balance of
Power".

105
potential threats than to hope that strong states will remain benevolent."34 Having

said that, Walt does specify three types of states that are more likely to bandwagon:

(a) extremely weak states who are more vulnerable and who can do little to affect

equilibrium; (b) weak states who have no available source of allied support; and (c)

weak states who are in close proximity to a giant. According to him, unlike strong

neighbors who are more likely to balance, "small and weak states in close proximity

to a great power are the most likely candidates for bandwagoning. Because they will

be the first victims of an attack, because potential allies may be scarce or distant, and

because they lack the capabilities to stand alone or alter the balance significantly,

accommodating a neighboring great power may occasionally make more sense."35 In

these circumstances, smaller states' bandwagoning act is motivated primarily by

security concerns. They represent the case of "if you can't beat them, join them."

Walt's propositions, however, have been disputed by scholars on various

grounds. Eric Labs, Robert Kaufman, and Robert Powell, for instance, have all argued

that states bandwagon more prevalent than Walt suggests.36 This argument is echoed

by historian Paul Schroeder, who sees bandwagoning as more common than

balancing, particularly by smaller powers. 37 Schroeder observes that states, if they

can, usually try to cope with threats not by balancing but by other means, ranging

from bandwagoning and hiding to transcending and grouping.38 He invokes the

example of the reactions of European states to Napoleonic France: "Not only did

34
Walt, "Alliance Formation and the Balance of Power", p. 15.

35
Ibid., p. 18. Emphasis my own.

36
Eric J. Labs, "Do Weak States Bandwagon?"; Robert G. Kauffman, "To Balance or to Bandwagon?
Alignment Decisions in 1930s Europe," both in Security Studies 1 (Spring 1992), pp. 383-416 & pp.
417-47, respectively. See also Robert Powell, In the Shadow of Power (New Jersey: Princeton
University Press, 1999), esp. pp. 149-96.

37
Schroeder, "Historical Reality vs. Neo-realist Theory," p. 117.

38
Paul W. Schroeder, "Why Realism Does Not Work Well for International History," in Vasquez and
Elman, Realism and The Balance of Power, p. 119.

106
every smaller power on the Continent accept Napoleonic hegemony more or less

willingly and try to live under it, but so, at times, did every other continental great

power - Prussia, Austria, and Russia. It is not an exaggeration to say that a major

occupation of many leading statesmen in large and smaller European countries alike

in the Napoleonic era was trying to work out ways by which they could survive and

prosper in and under Napoleonic hegemony rather than challenge it [emphasis

added]." 39 Schroeder adds that the main reason why these states finally ended up

resisting Napoleonic domination "lay not in some imperative compelling them to

balance against excessive power, but in Napoleon - in the repeated, constant proofs

he gave that he would never be content with any kind of stable and tolerable

hegemony, but understood no relationship save exploitative empire." 40 In other

words, states do not resist hegemony per se, but rather the type of hegemony that

threatens their maneuverability and survival.

Others like Steven David and Deborah Welch Larson criticize Walt for

ignoring the role of domestic factors in alignment decisions. To explain Third World

alignment behavior, David puts forth a theory of "omnibalancing", which focuses on

the drive of leaders to survive in power. He contends that rather than just balancing

against external threats, Third World leaders tend to bandwagon with an outside

power which often poses less pressing dangers, so that they can focus their resources

on balancing against more immediate and dangerous domestic threats.41 Larson

argues along a similar vein, suggesting that weak regimes are likely to bandwagon

with a threatening power because alignment with a potential hegemon serves to

consolidate their regime authority in various ways, "by putting an end to external

39
Ibid, p. 116.
40
Ibid.

41
Steven R. David, Choosing Sides: Alignment and Realignment in the Third World (Baltimore, MD:
The Johns Hopkins University Press, 1991), esp. pp. 6-26.

107
subversion, undermining the political position of domestic rivals, providing them with

a source of economic assistance and an aura of invincibility by association with the

great power's victories." 42

The arguments put forward by Schroeder, David, and Larson make an

important contribution to the understanding of bandwagoning behavior. They suggest

that bandwagoning may not necessarily be driven by the negative incentives of

avoiding threats (as stressed by the earlier writers); rather, the behavior can be

motivated by the positive inducements of obtaining rewards from a powerful actor.

This point has later been made more explicit by Randall Schweller, who, in his

1994 article "Bandwagoning for Profit", articulates the opportunistic aspects of the

behavior. He disputes Walt's conception of bandwagoning, arguing that the term - in

focusing only on threats - has been defined "too narrowly" and "reflects a status-quo

bias." 43 These conception problems lead Schweller to raise doubts about Walt's

conclusion that balancing is more common than bandwagoning. Schweller instead

argues that the opposite may be true. That is, depending on the nature of the existing

order and the political goals of states, bandwagoning may be far more widespread

than Walt suggests. Schweller stresses that states have very different motives to

choose balancing or bandwagoning. In his own words: "The aim of balancing is self-

preservation and the protection of values already possessed, while the goal of

bandwagoning is usually self extension: to obtain values coveted. Simply put,

balancing is driven by the desire to avoid losses; bandwagoning by the opportunity for

42
Deborah Welch Larson, "Bandwagoning Images in American Foreign Policy: Myth or Reality?" in
Robert Jervis and Jack Snyder, eds., Dominoes and Bandwagons: Strategic Beliefs and Great Power
Competition in the Eurasian Rimland (New York: Oxford University Press, 1991), pp. 102-3. For a
similar argument, see Michael N. Barnett and Jack S. Levy, "Domestic Sources of Alliances and
Alignments: The Case of Egypt, 1962-1973," International Organization 45:3 (Summer 1991), pp.
369-95; Jack Levy and Michael Barnett, "Alliance Formation, Domestic Political Economy, and Third
World Security," The Jerusalem Journal of International Relations 14:4 (December 1992), pp. 19-40.

43
Schweller, "Bandwagoning for Profit," p. 74 & p. 79 respectively.

108
gain." 44 He further elaborates:

Alliance choices ... are often motivated by opportunities for gains as well as danger,
by appetite as well as fear. Balance-of-threat theory is designed to consider only cases
in which the goal of alignment is security, and so it systematically excludes alliances
driven by profit. Yet, as Walt himself claims, one of the primary motivations for
bandwagoning is to share in the spoils of victory. When profit rather than security
drives alliance choices, there is no reason to expect that states will be threatened or
cajoled to climb aboard the bandwagon; they do so willingly. The bandwagon gains
momentum through the promise of rewards, not the threat of punishment.45

That alignment choices are motivated both by fear as well as profit is, to a large

extent, a reflection of smaller states' differing propensities and attitudes toward

power. That is, while some states may view power as something to be rejected and

neutralized, others may perceive it as something to be utilized, accommodated, and

accepted.

In that sense, balancing and bandwagoning may well represent two extreme

ends of the power rejection-acceptance spectrum (see Figure 3.1). If a state is alarmed

by the ascendancy of a big power, it is likely to reject and neutralize it by pursuing the

balancing policy. Conversely, if a state is attracted to or awed by the preponderance of

a power, it is likely to accept and accommodate it - voluntarily or otherwise - by

embracing bandwagoning. Balancing and bandwagoning thus stand in antithesis to

each other.

FIGURE 3.1:
THE POWER REJECTION-POWER ACCEPTANCE SPECTRUM

Balancing Bandwagoning
* *

Degree of Power Rejection Degree of Power Acceptance

44
Ibid, p. 74. Emphasis added.

45
Ibid, p. 79.

109
A Critique of the "Balancing versus Bandwagoning" Debate

Notwithstanding its enduring importance in the study of IR, the "balancing versus

bandwagoning" debate is flawed in one important aspect. That is, in framing the

debate in a dichotomous manner, it diverts attention away from other types of policy

responses that may be equally or more prevalent than balancing and bandwagoning.

This study argues that balancing and bandwagoning are not as common as the

two schools of thought have suggested; and that under certain conditions, smaller

states may, and often do, adopt policies other than the two straightforward choices in

order to cope with a rising power. My argument is based on three major reasons:

First, balancing and bandwagoning - in spite of their crucial roles as discussed

above - are rarely the first or the cure-all option for smaller states. At best, the two

strategies only represent the second best choice that states are compelled to adopt in

the absence of more optimal options. To understand this, it is appropriate to reiterate

what I have discussed in Chapters 1 and 2 on the trilemma of policy options for

smaller states: that none of the three policy approaches - alliances, institutionalized

cooperation, and internal efforts - could alone enable a state to mitigate some facets

of risks (security, economic, or political dangers) without exposing it to other

problems. Both balancing and bandwagoning are essentially a policy of alliances,

which, despite its security and economic benefits, often entails undesirable political

consequences to weak actors. As already discussed, these consequences include the

danger of increased dependence on outside powers, the risk of external interference

and intervention, as well as the erosion of state autonomy. It is due to problems like

these that Machiavelli warned about the risks of forging alliances with stronger ones:

"[A] prince ought never to throw in his lot with one more powerful than himself in an

aggressive cause, unless sheer necessity compels him. In case of victory, he remains

the prisoner of that stronger ally. And princes ought to avoid at all costs placing

110
themselves at the mercy of others [italics added]." 46 Schroeder similarly observes that

balancing has historically been more often a fallback policy or last resort than a first

choice 47

Machiavelli's statement prompts an important question: what kinds of

conditions would compel smaller states to enter into an alliance, and to face up with

the consequences that come with it? Most major works on balancing and

bandwagoning, as discussed, have highlighted the sorts of pressing or critical

situations where smaller states' core values - mainly national security, but also

regime survival - are directly at stake, which necessitate them to align with other

powers for support and assistance. Such situations may arise in one of the following

conditions: (a) an actual or looming conflict involving a smaller state and another

stronger actor (a big power or a neighboring country); (b) a deteriorating internal

problem that the smaller state is not capable of solving on its own; (c) an intense great

power conflict that drags in the smaller state and forces it to take sides; and (d) a

critical juncture in which the state views a rare opportunity to jump on the

bandwagon, in order to advance its key goals. These are all extraordinary situations.

In that sense, balancing and bandwagoning can be viewed as extraordinary strategies

that states adopt under extraordinary circumstances.

This brings us to the second reason why balancing and bandwagoning may not

be as prevalent as suggested by the two schools. That is, the behaviors are more likely

to occur under certain specific, extraordinary conditions - wars, conflicts, internal

crises, all-out great power rivalries, a clear and present threat, etc - but they are less

likely to occur under general, "ordinary" circumstances during peacetime. In

circumstances where a smaller state is neither confronted by a direct threat nor

46
Niccolo Machiavelli, The Prince, translated by A. Robert Caponigri (Chicago: Henry Regnery,
1963/1965), Chapter XXI, p. 117.

47
Schroeder, "Historical Reality vs. Neo-realist Theory," p. 118; Schroeder, "Why Realism Does Not
Work Well for International History," p. 119.

Ill
compelled by any pressing internal or external problems to align with a great power

for assistance, it is more reasonable to expect that the state would want to develop

more balanced relations with different big powers whenever possible, not least to

maximize its margin of maneuverability. Put differently, in a situation where a state is

allowed to look upon different big powers as sources of support, there is no reason

why the state would want to put all its eggs into a single basket and face the risks of

placing itself at the mercy of others. Balancing and bandwagoning - despite their

differences in alignment partners -are both a policy of putting all eggs into a single

basket, which will expose a smaller state to the risks of over-dependence and loss of

autonomy, not to mention the danger of provoking hostility from the opposing camp.

No rational actor who has a choice would want to subject itself to these hazards.

Hence, in ordinary circumstances where a state is not forced to take sides among the

powers, it is more prudent for the state to diversify its strategic linkages while

avoiding the costly policies of balancing or bandwagoning.

Third, smaller states - particularly those who are not confronted by any direct

and immediate security threat - do have an array of policy alternatives other than

balancing and bandwagoning to cope with an ascendant power. Most of these

alternatives are "mixed strategies" that manifest in different forms of institutionalized

cooperation and internal efforts as discussed in Chapter 2. Others involve

combinations of non-military options and loose forms of alliance arrangements.

A cursory glance at the literature shows that the list of these alternative

strategies is a long and growing one. Different writers, due to their own research

topics and objectives, have observed different state strategies and have used different

terminologies to describe those strategies. Some of the terminologies - such as

"binding", "grouping", and "locking-in" - are largely overlapping. Others - such as

112
"buck-passing", "distancing", and "hiding" - are related but not the same.48 Given

space limitations, I shall briefly expound on three widely discussed strategies that are

most relevant to my research task. These strategies are: binding, dominance-denial,

and soft-balancing. Each of them is distinguishable from the other in terms of

functions and modus operandi. Together, they reflect and reinforce the point that

smaller states often do not have to choose between balancing and bandwagoning.

Binding. This alternative strategy refers to a state's effort to bind a big power

into institutional collaborative arrangements, for the purpose of influencing and

restraining the actions of the power through group persuasion and pressure.49 Binding

is largely identical to what Paul Schroeder calls "grouping", by which he means a

strategy of drawing a potential threat "into a larger group so that group suasion and

group norms, pressures, and incentives will control its actions and possibly turn the

threat into cooperation." 50 According to Schroeder, this was "the preferred, dominant

strategy" most of the time for most European Continental powers during the

nineteenth century, which was used as "an alternative to the British balancing policy"

to cope with the Russia menace, largely by "using group pressure and inducements." 5 '

As an alternative strategy, binding reflects a degree of readiness on the part of small

states to recognize and accommodate - but not necessarily accept - the ascendancy of

a big power. Binding is closely related to the "engagement" policy, which also

48
See, for instance, Thomas J. Christensen, and Jack Snyder, "Chain Gains and Passed Bucks:
Predicting Alliance Patterns in Multipolarity," International Organization 44:2 (Spring 1990), pp. 137-
68; Schroeder, "Historical Reality vs. Neo-realist Theory"; Schweller, Unanswered Threats.

49
See Joseph M. Grieco, "Understanding the Problem of International Cooperation: The Limits of
Liberal Institutionalism and the Future of Realist Theory," in David A. Baldwin, e d , Neorealism and
Neoliberalism: The Contemporary Debate (New York: Columbia University Press, 1993), p. 331; G.
John Ikenberry, After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order After
Major Wars (Princeton: Princeton University Press, 2001), p. 64; Schroeder, "Why Realism Does Not
Work Well for International History," p. 119; Randall L. Schweller, "Managing the Rise of Great
Powers: History and Theory," in Johnston and Ross, Engaging China, p. 13. See also Chapter 2 of this
study, pp. 56-7.

50
Schroeder, "Why Realism Does Not Work Well for International History," p. 119.

51
Ibid.

113
involves the use of non-coercive means to influence a big power's behavior. This will

be elaborated later.

Dominance-denial. This strategy has been described differently by different

writers. Some scholars have dubbed it as "balance of influence", 52 others have

labeled it as "counter-dominance", 53 yet others have called it "complex balancing."54

Whatever the nomenclatures, the strategy is generally referred to as a state's

deliberate act to encourage and ensure the participation of multiple extra-regional

powers in regional affairs, for the purpose of capitalizing on the competitive nature of

the inter-great-power relations as a way to prevent the emergence of an unchecked

and predominant power. It is distinguished from the balancing policy by its modus

operandi - unlike balancing which necessarily involves the use of military power as a

source of countervailing force, dominance-denial is a disposition to mobilize political

influence as a basis to enable the big powers to check on one another. As an

alternative strategy, counter-dominance reflects smaller states' desire to neutralize

and limit the ascendancy of a big power.

Soft-balancins. This strategy is a balancing policy that falls short of formal

military alliances. 55 According to T.V. Paul, soft balancing occurs "when states

52
John David Ciorciari, "The Balance of Great-Power Influence in Contemporary Southeast Asia,"
International Relations of the Asia-Pacific 9:1 (2009), pp. 157-96.
53
Amitav Acharya, "Containment, Engagement, or Counter-Dominance? Malaysia's Response to the
Rise of China," in Alastair Iain Johnston and Robert Ross, eds., Engaging China: The Management of
an Emerging Power (New York: Routledge, 1999), pp. 129-51.
54
Evelyn Goh, "Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security
Strategies," International Security 32:3 (Winter 2007/08), pp. 113-57.

55
See Yuen Foong Khong, "Coping with Strategic Uncertainty: The Role of Institutions and Soft
Balancing in Southeast Asia's Post-Cold War Strategy," in J.J. Suh, Peter J. Katzenstein, and Allen
Carlson, eds., Rethinking Security in East Asia: Identity, Power, and Efficiency (Stanford: Stanford
University Press, 2004), pp. 172-208; Paul, "The Enduring Axioms of Balance of Power Theory,"
pp. 1-25. See also: Robert A. Pape, "Soft Balancing against the United States," International Security
30:1 (Summer 2005), pp. 7-45; Stephen G. Brooks and William C. Wohlforth, "Hard Times for Soft
Balancing," International Security 30:1 (Summer 2005), pp. 72-108; Keir A. Lieber and Gerard
Alexander, "Waiting for Balancing: Why the World Is Not Pushing Back," International Security 30:1
(Summer 2005), pp. 109-39.

114
generally develop ententes or limited security understandings with one another to

balance a potentially threatening state of a rising power. Soft balancing is often based

on a limited arms buildup, ad hoc cooperative exercises, or collaboration in regional

or international institutions; these policies may be converted to open, hard-balancing

strategies if and when security competition becomes intense and the powerful state

becomes threatening." 56 Put differently, it is a more subtle form of balancing. It

reflects smaller states' determination to countervail a rising power, albeit in an

indirect or tacit way.

Several themes can be inferred here. First, given that the alternative strategies are not

either-or options, states can and often do implement them simultaneously. This is in

part to promote multiple policy goals, and in part to remedy the weaknesses of

individual policy options. Because no single strategy can serve as a cure-all option,

smaller states tend to pursue "mixed" strategies - rather than rely on any single

"straightforward" policy such as balancing or bandwagoning - in an effort to grapple

with the various uncertainties associated with the rise of a major power. For instance,

it is not uncommon for states who pursue "engagement" to also pursue "counter-

dominance" and/or "soft-balancing" as a fallback policy. In fact, as shall be illustrated

later (especially Chapters 7-8), in situations where small states are not directly

threatened, mixed strategies are often more prevalent.

Second, some of the alternative strategies indicate that, while balancing must

necessarily take the form of military alliances, not all alliance arrangements are aimed

at performing the balancing task. As discussed above, alliances are at times forged to

perform functions other than balancing. These include: avoiding attacks, gaining

profits, preparing for contingency, and influencing the behavior of allies. This is

56
Paul, "The Enduring Axioms of Balance of Power Theory," p. 3.

115
particularly true in the cases of mixed strategies, when alliance arrangement is

pursued in conjunction with other non-military options. Hence, it may be premature

or even simplistic to hastily attribute the mere existence of alliance arrangement as

"evidence " of balancing policy. Doing so may obscure the range of states' options,

and leave out variables that might be pertinent for the task of analyzing smaller states'

alignment choices.

Third, each of the alternative strategies can be distinguishable from balancing

and bandwagoning not only by their differing functions and modus operandi, but also

by their differing degrees ofpower rejection and power acceptance. Unlike balancing

and bandwagoning which respectively represent the highest level of rejection and

acceptance on the part of small states toward a big power, the alternative strategies all

lie somewhere in between the two extreme poles of the spectrum. For instance,

"counter-dominance" and "soft balancing", with their functions of neutralizing and

counter-checking the growing capability of a rising power, occupy places that are

closer to power-rejection but farther from the power-acceptance axis. "Binding", on

the other hand, with its function of recognizing and accommodating the rising

power's interests, lies closer to power-acceptance but farther from the power-rejection

pole. These strategies can be juxtaposed on the spectrum of power rejection-

acceptance, as shown in Figure 3.2 below. While the spectrum cannot provide any

clear-cut dividing line between each of the state strategies, it may nonetheless offer a

rough measurement of the ordinal values of the strategies, which can be used as an

indicator to reflect individual states' differing attitudes toward a particular big power.

To sum up: considering that balancing and bandwagoning policies are neither

the first, the cure-all, nor the only option for smaller states to cope with a rising

power, and that the two policies will prevail only under certain extraordinary

conditions, I have argued that balancing and bandwagoning are not as common as the

116
mainstream IR schools have suggested. In addition, I have also argued that, again

contrary to what has been assumed by the two schools of thought, smaller states often

do not have to choose between balancing and bandwagoning. Rather, in situations

where states are not endangered by a direct threat, they will tend to opt for "mixed

strategies" - by adopting both military and non-military options - in the hope of

optimally mitigating the multiple risks they face.

FIGURE 3.2:

MEASURING RESPONSES TO POWER ASCENDANCY

Balancing Soft-balancing Dominance-denial Binding Bandwagoning

Degree ofPower Rejection Degree of Power Acceptance

"Hedging" - a term brought into the study of IR to refer to an alternative to

balancing and bandwagoning - is one such mixed strategies. It has been used not only

to describe small-state reactions to power ascendancy, but also big-power strategies.57

That the term is used as an "alternative" state response by no means implies

that states who eschew balancing and bandwagoning will necessarily embrace

hedging. Hedging is a form of mixed strategies, but not all mixed strategies will

constitute hedging behavior. As a policy choice, hedging will prevail only under

certain specific conditions. It is to this aspect that I now turn.

57
See, for instance, Evan S. Medeiros, "Strategic Hedging and the Future of Asia-Pacific Stability,"
The Washington Quarterly (Winter 2005-06), pp. 145-167; Rosemary Foot, "Chinese Strategies in a
US-Hegemonic Global Order: Accommodating and Hedging," International Affairs 82:1 (January
2006), pp. 77-94; Peter W. Rodman, Assistant Secretary of Defense for International Security Affairs,
"The Military Power of the People's Republic of China," prepared statement before the House Armed
Services Committee, June 22, 2006, p. 7; Thomas J. Christensen, "Fostering Stability or Creating a
Monster? The Rise of China and U.S. Policy toward East Asia," International Security 31:1 (Summer
2006), pp. 81-126.

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 "Hedging" as an Alignment Choice

Following Palmer and Morgan, I take it that a state's foreign policy behavior should

be viewed as a "bundle of policies", rather than a single policy or discrete action.58

Hedging, accordingly, is conceived here as a strategic behavior that is consists of not

one but a bundle of interrelated policy options. Specifically, it is used as a form of

alignment choice in which a state chooses to position itself vis-a-vis the big powers,

as part of its efforts to struggle for security, prosperity, and autonomy.

This section seeks to offer a working definition of hedging. It does so by

detailing the conditions that give rise to the behavior, as well as by explicating the

raison d'etre and essence of hedging that fundamentally distinguishes it from other

forms of alignment choice, i.e. balancing and bandwagoning.

Defining and Delineating "Hedging"

The term hedging is defined here as a strategic behavior under the conditions of high-

stakes and high-uncertainties, in which a country seeks to offset risks by pursuing

multiple opposite and mutually-counteracting options, as an effort to insure its long-

term interests in a fluid international environment.59

The notion of "risks" is key to understanding hedging as a human behavior,

either in agricultural, financial, or political domains. In agriculture and finance, the

58
Glenn Palmer and T. Clifton Morgan, A Theory of Foreign Policy (Princeton: Princeton University
Press, 2006).

59
This definition is adapted from Glenn G. Munn et al., Encyclopedia of Banking and Finance, 9th
edition (New York: McGraw-Hill, 1991), p. 485; Jonathan Pollack, "Designing a New American
Security Strategy for Asia," in James Shinn, ed., Weaving the Net: Conditional Engagement with China
(New York: Council on Foreign Relations, 1996), pp. 99-132; Chien-Peng Chung, "Southeast Asia-
China Relations: Dialectics of 'Hedging' and 'Counter-Hedging'," in Daljit Singh and Chin Kin Wah,
eds., Southeast Asian Affairs 2004 (Singapore: ISEAS, 2004), pp. 35-53; Raija Markkanen and
Hartmut Schroder, eds., Hedging and Discourse: Approaches to the Analysis of a Pragmatic
Phenomenon in Academic Texts (Berlin: Walter de Gruyter, 1997); John Stephens, The Business of
Hedging (London: Pearson Education). When the term is used to describe a state behavior, it does not
imply that the country's policy-makers must necessarily design a cohesive, carefully-crafted, and
highly-coordinated "strategy". Nor does it imply that the state will surely attain the goals of hedging. It
simply suggests that the state's actions are exhibiting a tendency to hedge - i.e., a human inclination to
offset risks when the situation is uncertain and the stakes are high.

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risks stem largely from uncertainty and fluctuations in prices of commodities.60 In

politics, the risks derive chiefly from uncertainty and fluctuations in power structure.

In the realm of international politics, this refers to the unpredictability in the

distribution of power across the major units within the international system.

In order to understand how concerns about "fluctuations in power structure "

may motivate a smaller state to hedge, it is necessary to first reiterate the types of

risks faced by a smaller state, and to illustrate the double-edged role of great powers

in the smaller state's efforts to mitigate those risks.

The Double-Edged Role of Great Powers in Smaller States' Risk Management

As discussed in Chapter 1, the risks in international relations can be categorized into

three major genres: security, economic, and political. While some of these risks (e.g.

military aggression and political encroachment) are originated from intentional acts of

particular state or non-state actors, others are products of impersonal or structural

forces such as systemic changes in the distribution of power, global economic

downturns, and domestic political decay. As already mentioned, regardless of their

origins, each of these risks is especially harmful to smaller states, in part because the

states' domestic weaknesses tend to invite external exploitation, and in part because

they lack resources to absorb structural shocks and to reduce risks by themselves.

In this regard, great powers often play a crucial role - solicited or otherwise -

in a smaller state's risk management. Their roles, however, are far from

unidirectional. On the one hand, a big power can be a source of boon for a smaller

state. It may throw its weight behind the state's ruling elites and provide them with

the needed resources to mitigate certain risks, such as a looming military threat, an

enduring economic hardship, or the non-traditional security challenges like terrorism

60
Munn, Encyclopedia of Banking and Finance, p. 485; John Downes and Jordan Elliot Goodman,
Dictionary of Finance and Investment Terms, 5th edition (New York: Barron's, 1998), p. 254.

119
and natural disasters. On the other hand, a big power may harm a smaller state in

every conceivable way. It may turn its might as a "right" to impose its political will

on countries within its "sphere of influence"; it may enforce economic sanctions; or it

may invade them for resources or for political domination. These are all issues of

survival. The stakes, therefore, are extremely high for smaller states to maintain

"optimal" relations with the big powers.

Such double-edged problem is compounded by the complexity and uncertainty

in inter-great-power relations. Whenever great powers are embroiled in intense

rivalries, smaller states will be under pressure to take sides. The dilemma for them is:

no matter what position they hold, they will still have to face up to certain unwanted

consequences. If they decide to join one of the camps, they will risk alienating the

opposing power. Conversely, if they choose to stay away from any camp, they will

risk getting nowhere, and worse, invite suspicions and hostilities from all sides.

Significantly, in situations when the great powers are engrossed in detente, smaller

states may still suffer. This is because in such situation smaller actors would lose

much of their bargaining leverage, and they will have to worry about the possibility

that the great-power-collaboration is at the expense of sacrificing their interests. An

ancient proverb captures this well: "When two elephants fight, the grasses suffer; and

when the same two elephants make love, the grasses also suffer." In both scenarios,

smaller states are powerless and have no control over what befalls them.

Why Are Smaller States Concerned about Fluctuations in Power Structure?

Uncertainty in inter-great power relations, to a large extent, is both a symptom and a

cause of the problem of "fluctuations in power structure" - i.e. changes in the

distribution of capabilities and commitments across the great powers.

Fluctuations in the distribution of power - either in a gradual or precipitous

120
manner - are a regular feature of political life, much in the same way as fluctuations

in prices a natural and inevitable phenomenon in the economic sphere.61 As historian

Paul Kennedy explains, "The relative strengths of the leading nations in world affairs

never remain constant, principally because of the uneven rate of growth among

different societies and of the technological and organizational breakthroughs which

bring a greater advantage to one society than to another." 62 Robert Gilpin, viewing

from the perspective of political economy, similarly observes that the process of

uneven economic growth causes major structural changes, which pose a major

problem of adjustment for individual nations. 63 Earlier, in his influential work on

international political change, Gilpin asserts that it is "the differential rates of growth

of declining and rising states" that produce a "decisive redistribution of power" in the

international system. 64

Distribution of capabilities, to be sure, is only one of the two dimensions of

power structure. Another dimension is "strategic commitments" - i.e. the resolve and

readiness of a great power to using its capabilities to continue its strategic pledge in a

61
For analyses from the perspective of "power cycle theory," see Charles F. Doran, The Politics of
Assimilation: Hegemony and Its Aftermath (Baltimore: Johns Hopkins University Press, 1971); Doran,
Systems in Crisis: New Imperatives of High Poltics at Century's End (Cambridge: Cambridge
University Press, 1991); Doran, "Economics, Philosophy of History, and the 'Single Dynamics' of
Power Cycle Theory: Expectations, Competition, and Statecraft," International Political Science
Review 24:1 (2003), pp. 13-49.

62
Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from
1500 to 2000 (New York: Random House, 1987), pp. xv-xvi.

63
Robert Gilpin, The Political Economy of International Relations (Princeton: Princeton University
Press, 1987). Gilpin opines that the process of economic growth is uneven in several respects: "The
growth rate varies considerably from one region of the globe to another, and the primary locus of
growth shifts from one country and region to another. Various sectors of an economy also grow at
different rates, and the high-growth sector shifts, in time, from less to more technically advanced
industries; leading, trailing, and declining economic sectors exist in every economy. Furthermore, the
rate of economic growth is uneven over time; it fluctuates from periods of slow to rapid growth." See
p. 93.

64
Specifically, Gilpin maintains that the decline of a dominant power in the system is a product of both
internal (the decreased rate of economic growth, the increasing cost of protection, a tendency for both
private and public consumption to grow faster than the gross national product, the shift to services, and
the corrupting influence of affluence) and external factors (the increasing costs of political dominance,
as well as the loss of economic and technological leadership). See Robert Gilpin, War and Change in
World Politics (Cambridge: Cambridge University Press, 1981), pp. 156-85.

121
particular region. While a big power's level of strategic commitments is largely an

extension of its capabilities (a high level of commitments is possible only if there is a

high level of capabilities), the two do not always go hand-in-hand. The fluctuations in

the U.S. strategic commitments in Southeast Asia (after the Tet Offensive in 1968 and

the Nixon Doctrine in 1969) and in Afghanistan (after the Soviet withdrawal in 1989),

for instance, are clear testimonies that even when a big power's relative strengths are

fairly constant or on the rise, the colossus might reduce its strategic commitments in a

particular region either because of domestic factors or external reassessment, or both.

Whatever the causes, a fluctuation in a big power's commitments - regardless of

whether there is a fluctuation in the distribution of capabilities - would bring a change

to the power structure of a particular region, the consequences of which are to be felt

most keenly by smaller states.

Smaller states are acutely concerned about fluctuations in power structure,

chiefly because any major change in the great powers' relative capabilities and

commitments are bound to alter their external environment, often by directly

increasing or easing the magnitude of their security risks. For instance, a smaller state

is expected to face growing and more aggressive threats, if its patron's relative

capabilities are declining and/or when its protector is scaling down its commitments

in the region (e.g. Southeast Asia in the 1970s, after the British East of Suez pullout

and the U.S. retreat from Indochina). Conversely, a smaller state is expected to enjoy

a more relaxed security environment, if and when the distribution of capabilities

abruptly shifts out of favor for its adversaries (e.g. Southeast Asia in the early 1990s,

after the disintegration of Soviet power and the subsequent termination of Moscow's

assistance to Hanoi). In each scenario, the fluctuations would affect smaller states'

external environment in a direct and forceful way, albeit in different directions.

Significantly, what is at stake is not only the question of security (the sources and

122
magnitude of threat), but also issues of prosperity and autonomy (the sources of

economic and political assistance which smaller states could turn to).

The problem for smaller states is that, while they know that the power

structure will inevitably fluctuate at some point - and will inevitably affect them in

some way - it is almost impossible for them to predict how and when this will take

place. This unpredictability is in part because the distribution of power is a systemic

process that cannot be controlled by any single actor, and in part because the strategic

commitments of a great power are always open to change, as explained.

This unpredictability would mean two things for smaller states. First, the

changeability of great-power commitment would mean that the "security guarantees"

of big powers will always be uncertain, if not unreliable. Hence, there will always be

a fear of abandonment on the part of smaller states. Second, the unpredictability in

great powers' relative capabilities would mean that the sources and magnitudes of

"threat" to smaller states will also be uncertain. Thus, there will always be a fear of

backing the wrong horse and an anxiety about being entrapped into conflicts that they

did not choose.

Structural Conditions for Smaller States' Alignment Choices

Given the high stakes and the high uncertainties involved, smaller states invariably

have to get to grip with an age-old question: how should a smaller actor position itself

vis-a-vis the big powers in a way that would allow it to maximize benefits while

simultaneously mitigating any undesired risks? Which power should it align with?

How close or how far should the relations be kept? In what areas should one keep the

distance from the powers, and in what areas should it seek to close ranks?

A state's alignment choices are dependent on many factors. Two structural

conditions, however, play a particularly important role: (a) the level of stakes; and (b)

123
the level of certainty/uncertainty involved in a smaller state-big power relationship.

As illustrated in Figure 3.3, when the stakes are low (for instance, a smaller

state's relations with a distant big power who does not have an extensive interest and

does not maintain a strategic presence in the region), a small state could afford to do

nothing and do something that serves to preserve the status quo. But when the stakes

are high (a smaller state's relations with a big power who may help or harm its quest

for survival), the state is likely to adopt a discernible alignment choice like balancing,

bandwagoning, and hedging. In this situation (high-stakes), a state's ultimate choice

may be determined by the level of certainty/uncertainty in two particular aspects: (a)

the presence or absence of an imminent and profound threat to its security; and (b) the

availability of a reliable source of assistance that the state could turn to.

Figure 3.3:
Stakes versus Uncertainties Matrix

Uncertainties
Low High

• Balancing • Hedging

High • Bandwagoning

Stakes
• Do nothing • Do nothing
Low
• Do something • Do something

The choice will be more straightforward if the circumstances are more certain.

That is, in low-uncertainty cases where a state's leaders come to perceive a power as

an unambiguous threat, and when a reliable alliance partner is readily available, the

state is likely to align against the threatening power. Balancing behavior will prevail,

124
and the state's strategic assets will be mobilized for security-seeking goal. However,

if a reliable source of alliance support is not available for counter-checking the

threatening power, then the smaller state is likely to align with the power in order to

avert attack or to avoid annexation. Security-motivated bandwagoning behavior will

prevail. On the other hand, in cases where leaders view a big power not as a threat but

as an unequivocal source of assistance who will bring benefits needed for its survival,

then the state is likely to align with it. Profit-driven bandwagoning will prevail.

More often, however, the circumstances are less clear-cut. This is when state

leaders do not perceive any actor as a clear and present threat, and do not view any

particular power as a principal source of external assistance. Instead, they may view

the embodiments of risks and opportunities to be more diffuse, fluid, and uncertain.

Typically, this will be a situation when a smaller state's relations with great powers

are characterized more by ambivalence than outright hostility or absolute amity; and

where a state comes to view a power as a source of problems in certain domains, but a

source of support in other areas.

Under such conditions, a smaller state's alignment choices will be more

intricate. The state is likely to maintain "equidistance" and pursue mixed and/or

opposite strategies vis-a-vis the major powers. That is, it is likely to hedge in the hope

of offsetting risks and optimizing its interests in different policy areas. As I have

already explained in Chapter 2 the reasons why smaller states are more inclined to opt

for mixed strategies, we shall focus here on the issue of equidistance. By equidistance,

I mean a conscious effort on the part of smaller actors to avoid leaning on one single

power at the cost of distancing others away; it does not necessarily mean keeping

exactly the same distance from each of the major powers.

125
Why Equidistance?

Smaller states, if they can, would prefer to maintain equidistance between the great

powers, not least to get the best of both worlds while avoiding the dangers of tilting

toward or away from a major actor. Indeed, in circumstances where they are not

compelled to lean to any particular side, smaller states would characteristically avoid

keeping too close or too distant a relationship with any of the big powers. This is

because getting too close with a colossus may entail the possibility of losing their

independence and inviting uncalled-for interference, which, in turn, may undermine

the ruling elites' legitimacy in the eyes of their constituencies. Moreover, getting too

close with one single power may also incur opportunity costs to small states, as they

may have to forego potential benefits that could have been tapped from other big

powers. On the other hand, keeping too far a distance from a Gulliver may cost the

state elites the opportunity of winning the sorts of benefits that can be utilized to boost

their domestic political standing. It may also arouse distrust from the Gulliver, thus

putting the smaller states in an unfavorable position if the big power gains

preeminence in the future. In comparison, maintaining equidistance by keeping

roughly close relations with all the big powers will not only enable smaller states to

preserve their maneuverability, it also enhances their leverage vis-a-vis the more

powerful actors.

How Do Smaller States Hedge?

The above discussion suggests that when the stakes are high and situation uncertain,

smaller states - as rational actors - are not likely to place all eggs in a basket; rather,

they will have the tendency to keep equidistance vis-a-vis the big powers. If the

equidistance position is enforced in conjunction with an adoption of mixed strategies

that are intended to create certain "mutually-counteracting" effects, then the act can

126
be said to have constituted a "hedging" behavior. However, if the position is not

intended to produce any mutually-counteracting results, then it should not be

described as hedging, but merely a general form of mixed strategies. By mutually-

counteracting, I mean an act of making opposite transactions in order to offset the

effects of one another. Hedging, in other words, is a behavior in which an actor makes

opposing transactions in the hope of offsetting and mitigating risks in the international

system.

The main reason why smaller states are inclined to opt for hedging under

situations of high-uncertainty and high-stakes is that, such an act of counteracting one

transaction against another will serve to cover and cancel out their exposures to risks.

It will also serve to provide a fallback position to cushion against risks in case the

situation takes an unfavorable turn. To illustrate this, we may take "engagement" and

"counter-dominance" - two of the three alternative strategies as discussed above - as

an example. Because (not in spite) of their contradictory effects, these two strategies

are often adopted concurrently by smaller states as part of their hedging posture vis-

a-vis a big power. They are implemented simultaneously, precisely to counteract one

another's effects. On the one hand, if engagement is the only policy pursued by a

smaller state vis-a-vis a big power, such a position will expose the smaller actor to the

risks of becoming over-accommodating and losing leverage to the more powerful

actor. A counteracting transaction like counter-dominance - by ensuring the

involvement of other big powers as a countervailing force - will serve as a

contingency option to mitigate the risks. On the other hand, if counter-dominance is

the only policy adopted by a smaller state, such a position will expose the state to the

risks of alienating the big power and foregoing the potential benefits that could have

been gained from the latter. A contradictory transaction like engagement - by

maintaining institutionalized diplomatic links and political contacts with the power -

127
will serve as a reassuring way to keep the channel of benefits open.

The counteracting effects of these strategies (and other corresponding policies)

will be elaborated in Chapters 7-8. Here, it is sufficient to note that hedging is a

behavior that aims at maximizing benefits while simultaneously putting in place the

fall-back arrangements for contingencies. In specific terms, it is a behavior that

manifests through the concurrent adoption of two sets of mutually-counteracting

policies, namely: the "return-maximizing" and the "risk-contingency" options. By

concurrently pursuing these options, smaller states hope that their hedging efforts will

serve as an insurance to protect their long-term interests, regardless of how the power

structure will fluctuate in future.

While smaller states would always have a tendency to hedge (and to maintain

equidistance among the big powers), such an inclination will not always be actualized

as a behavior. It is contingent on many factors. Three prerequisites stand out: (a) the

absence of an immediate threat (that might compel a smaller state to ally with a great

power for protection); (b) the absence of any ideological cleavages (that might rigidly

divide states into opposing camps); and (c) the absence of an all-out great power

rivalry (that might force smaller states to choose sides). Hedging behavior is possible

only when all three conditions are fulfilled.

Why Do Smaller States Tend to Hedge against a Rising and Proximate Power?

The inclination to hedge is particularly strong when small states are faced with the

reality of a fast rising power in close proximity. As discussed in Chapter 1, a giant

neighbor tends to loom large in the minds of small states. This is because unlike

distant powers who may come and go due to changes in their relative capabilities and

commitments, a neighboring giant's location would make it a permanent factor that

must be reckoned with at all times, in one way or another. The giant's impact will be

128
especially felt when its capabilities are on the rise. That is, as the colossus's power

continues to grow economically and militarily, its mounting capabilities and

aspirations are bound to create even greater challenges and opportunities to its

surrounding states. For these reasons, a neighboring giant is often seen by the leaders

of smaller states as one of the most salient factors in their external environment,

particularly from the long term point of view.

In part because of their realization that a powerful neighbor can harm or help

them much more than other actors, and in part because of their awareness that they

can never be certain about a rising power's future intentions, smaller states will tend

to opt for hedging. That is, they will tend to pursue mixed strategies that are intended

to produce mutually-counteracting effects, rather than to adopt the more clear-cut

policies such as balancing and bandwagoning. As shall be made clear in Chapters 5-8

- unless their security is directly threatened by the giant neighbor and unless they

have no alternative big powers to turn to - smaller states are not likely to pursue pure

forms of balancing or bandwagoning. Rather, in situations where the sources of

danger and assistance are far from certain, smaller states would consider balancing as

strategically unnecessary, politically provocative, and economically unwise. This is

because an alliance with other powers is likely to provoke and push the neighboring

giant in a hostile direction, thereby turning a potential security concern into a real and

immediate threat, while resulting in the loss of economic opportunities that could be

reaped from the giant's growing market. In a similar vein, smaller states would also

view bandwagoning as politically undesirable and strategically risky, albeit

economically appealing. This is because by accepting a subordinate role to the giant

neighbor, such a position will not only erode the states' national sovereignty and limit

their freedom of action, but it will also expose them to potential encroachments from

the latter.

129
 Hedging, by contrast, is deemed to be a more optimal choice to protect smaller

states' long-term interests in the face of the uncertainties associated with the rise of a

big power. By simultaneously pursuing the return-maximizing and risk contingency

measures vis-a-vis their increasingly powerful neighbor, smaller states seek to

maximize benefits while keeping all options open to deal with the undesired or

unanticipated events.

To summarize: given the great powers' ability to make or break smaller states'

efforts to mitigate risks, the stakes are always high for the smaller actors to maintain

"optimal" relationships with the major powers. Nevertheless, in as much as smaller

states would want to develop strong and stable relations with the powers, they simply

cannot be certain about when and how the great powers' relative capabilities and

intentions will change, and how the fluctuations will affect them. Such

unpredictability in the power structure, more often, would lead smaller states to fear

the risks of abandonment, the dangers of backing the wrong horse, as well as other

undesired consequences that might arise from tying themselves to one single power,

as noted. These fears, in combination, would have implications for small states'

alignment choices. Because of the high stakes and high uncertainty, smaller states - if

they can - would avoid making speculations about the future of big-power relations,

and would avoid taking sides among the big powers, unless they are faced with an

unambiguous source of threat or assistance. In other words, in circumstances where

the stakes are high but the sources of dangers and opportunities are uncertain, smaller

states will be more inclined to maintain equidistance and pursue mixed strategies vis-

a-vis the big powers. The strategies would constitute a hedging behavior, if they are

intended to maximize anticipated benefits while providing a fallback position to

cushion against undesired risks.

As a form of alignment choice, hedging is distinguishable from balancing and

130
bandwagoning by at least three aspects, as follows:

(a) A function of offsetting risks under the situation of high-uncertainties and high-
stakes. Hedging behavior, in essence, is about risk management. A hedger typically
manages and offsets risks through a concurrent adoption of return-maximizing and
risk-minimizing measures. In comparison, the function of balancing and
bandwagoning is narrowly confined to threat-reducing or profit-maximizing tasks,
respectively.

(b) An act of placing multiple policy bets. This is a sharp contrast to balancing and
bandwagoning, both a strategy of placing one single bet. The former, driven by the
threat-reducing goal, is an act when a state chooses to bet on a third country in order
to counter the threat of a rising power. The latter, driven by the profit-maximizing
motive, is an act when a state chooses to place all bets on a rising power. Hedging, by
contrast, guided by its very function of managing and offsetting risks, always
involves an act of multiple betting that is intended to produce a mutually
counteracting effect.

(c) An anticipation that regardless of the outcome of fluctuations in power structure, the
multiple bets will help the hedger to prevent the incurrence of unacceptable loss to its
long-term interests. On the contrary, states that pursue pure forms of balancing and
bandwagoning are likely to face entirely different consequences on their future
positions, depending on the outcome of structural changes. That is, they will be in a
favorable position if the power (either an established hegemon or a rising power) they
choose to align with eventually prevails; conversely, they will be in an unfavorable
position if the power they align with were vanquished by another competing power.
Hedging, hence, is about the avoidance of speculation.

131
 CHAPTER 4

RESEARCH DESIGN

This chapter presents the research design of the study. It is divided into three sections.

The first section operationalizes the dependent variables (how smaller states respond

to a rising and proximate power) by focusing on the case of ASEAN states' responses

to a re-emerging China in the post-Cold War era. It disaggregates the constituent

components of the states' hedging behavior into observable variables that can be

compared across countries and across time. The second section identifies two

independent variables and hypotheses in explaining why smaller states respond to a

rising power in the way they do. The final section illuminates the methods and the

rationale for case selection.

In the subsequent chapters (5-8), I shall delve into the historical and empirical

cases by focusing on the selected Southeast Asian states' alignment choices in the

face of the rising China.

Dependent Variables

In the previous chapter, I have defined hedging as an alignment behavior that is

distinguishable from balancing and bandwagoning. In this chapter, I shall construct

dependent variables that can be used to observe - and compare - the substance of

different countries' policy choices (both similarities and variations).

In line with the research objective of studying smaller states' alignment

choices in the face of a rising power, I propose to accomplish the task by using the

"balancing-bandwagoning spectrum" (see Figures 3.1 and 3.2 above) as a basis of

measurement. This spectrum, as noted, is plotted and measured by the degrees of

rejection and acceptance on the part of a smaller state toward a big power, with pure-

132
balancing representing the highest degree of power rejection, and pure-bandwagoning

the extreme form of power acceptance.1

As suggested in Chapter 3, hedging is conceived as a multiple-component

strategy between the two ends of the spectrum. In order to unpack such components

and transform them into observable dependent variables that are region-specific, I

propose to focus on a particular empirical case rather than general instances. This

procedure is necessary, not least because of the assumption that different actors tends

to hedge differently under different conditions. For reasons that will be explained

shortly (under "Rationale for Case Selection"), I have chosen to focus on selected

ASEAN states' responses to a rising China as a case to construct our dependable

variables (see Table 4.2).

Disaggregating "Hedging":

The Case of Southeast Asian Responses to the Rise of China

Based on their functions and modus operandi, the Southeast Asian states' hedging

behavior is consisted of five constituent components, as follows.2

Economic-pragmatism. This refers to a policy wherein a state seeks to maximize

economic gains from its direct trade and investment links with a big power, regardless

of any political problems that might exist between them. It signifies a neutrality point

on the spectrum, in that the act of profit-maximizing itself does not carry any value of

1
The need to go beyond the dichotomous terms was emphasized by Amitav Acharya and Ja Ian
Chong. See Acharya, "Containment, Engagement, or Counter-Dominance? Malaysia's Response to the
Rise of China," in Alastair Iain Johnston and Robert Ross, eds. Engaging China: The Management of
an Emerging Power (New York: Routledge, 1999), pp. 129-51; and Chong, Revisiting Responses to
Power Preponderance, Working Paper No. 54 (Singapore: Institute of Defence and Strategic Studies,
2003).

2
I owe an intellectual debt to Karl Jackson for his critique and suggestions that helped to improve the
conceptual parameters of the "balancing-hedging-bandwagoning" spectrum. However, I am solely
responsible for the limitations in this section.

133
power acceptance or rejection.

Economic-pragmatism is one of the policies that are equally emphasized by all

original ASEAN members. It is also the longest held, dating back to the Cold War

period when the states were still politically at odds with the People's Republic of

China (PRC). 3 In fact, all ASEAN states had embraced economic pragmatism well

before they proceeded to establish a formal diplomatic relationship with Beijing.

Singapore was the first to forge direct commercial and trade ties with the PRC, as

early as in the 1960s.4 It was followed by Malaysia in 1971, the Philippines in 1972,

Thailand in 1974, and Indonesia in July 1985.5 In all cases, economic-pragmatism

had the effects of developing socio-economic linkages while necessitating a certain

level of bureaucratic coordination, thus establishing the foundations for

normalizations when political conditions were ripe in the later years. This will be

made clear in the next chapter.

Binding-engagement. Engagement refers to a policy wherein a state seeks to establish

and maintain contacts with a big power, for the purposes of creating channels of

communication, increasing "voice opportunities", and influencing the power's policy

choice. 6 Binding, on the other hand, refers to an act in which a state seeks to

institutionalize its relations with a power by enmeshing it in regularized diplomatic

activities. When binding and engagement are combined, they serve to socialize and

3
Stephen Leong, "Malaysia and the People's Republic of China in the 1980s: Political Vigilance and
Economic Pragmatism," Asian Survey 27:10 (1987), pp. 1109-26.
4
Chia Siow-Yue, "China's Economic Relations with ASEAN Countries," and Chin Kin Wah, "A New
Phase in Singapore's Relations with China," both in Joyce Kallgren et al. eds., ASEAN and China: An
Evolving Relationship (Berkeley: University of California, 1988), pp. 189-214 & pp. 274-91,
respectively.

5
Ibid; John Wong, The Political Economy of China's Changing Relations with Southeast Asia
(London: Macmillan, 1984).

6
Adapted from Schweller, "Managing the Rise of Great Powers"; Yuen Foong Khong, "Singapore: A
Time for Economic and Political Engagement," both in Johnston and Ross, Engaging China, pp. 13-5
and pp. 110-3, respectively.

134
integrate a big power into the established order, for the goal of neutralizing the

revisionist tendency of the power's behavior.7

As shall be discussed in Chapters 5-8, Malaysia's engagement policy can be

traced back to the Cold War period, when it became the first ASEAN state to establish

diplomatic ties with Beijing in May 1974. In the case of Singapore, although it did not

establish formal relations with the PRC until after Indonesia had done so in 1990, the

city-state had long maintained close "unofficial" contacts with China, as is illustrated

by the exchanges of visits between their leaders since 1975. Throughout this period,

however, the states' engagement posture did not entail any "binding" element, simply

because there was no regularized diplomatic platform between them. It was not until

the early 1990s that binding has been implemented hand-in-hand with engagement,

following the creations of various institutionalized dialogue arrangements between

China and the ASEAN states. At the bilateral level, Malaysia and China established a

mechanism for consultations between the two foreign ministries in 1991. Singapore

followed suit in 1995. At the multilateral level, the smaller states have also been

actively engaging and binding China in various ASEAN-driven institutions, such as

the ASEAN Regional Forum (ARF) and the ASEAN-China dialogue process. Among

the regional states, Singapore and Malaysia (along with Thailand) are the most

enthusiastic advocates and practitioners of binding-engagement.

This observation, however, is not to say that the ASEAN states are taking a

"united stance" vis-a-vis China in these institutions. In fact, while the smaller states

have all attempted to make use of the multilateral institutions as an indispensable

platform to deal with the big power, the states' actions are, ultimately, aimed at

serving their own interests. When their interests converge, the individual states would

make a collective move (e.g. their efforts to enmesh China in the ASEAN-led

7
Ibid.

135
institutions in the early 1990s). However, when their interests diverge, the states

would go their own way (e.g. during the negotiations over the code of conduct in

South China Sea). Occasional collective efforts, hence, should not be mistaken as a

unified stance.

Limited-bandwagoning. Bandwagoning refers to a policy wherein a state, driven by a

desire to win present or future rewards, chooses to align with a great power who

displays a prospect for reaching preeminence. 8 It may exist in two forms: "pure

bandwagoning" (PB) and "limited bandwagoning" (LB). They are differentiated by at

least three accounts:

First, PB often takes the form of political and military alignment,9 whereas

LB involves only political partnership that is manifested in: (a) policy coordination

on selective issues; and (b) voluntary deference giving to the larger partner.

Second, PB signifies a zero-sum scenario for big powers, that is, when a state

bandwagons with one power, it simultaneously distances itself from another power.

LB, on the other hand, does not necessarily denote a zero-sum situation. A state may

opt for LB with a rising power while still maintaining its relations with the existing

hegemon.

Finally, PB implies an acceptance of superior-subordinate relations between a

patron and a smaller actor, whereas in LB, the smaller state cautiously avoids losing

its autonomy or becoming over-dependent. PB is hierarchy-acceptance whereas LB is

hierarchy-avoidance.

As will be demonstrated in Chapters 7-8 below, a desire to gain profit and a

8
Randall Schweller, "Bandwagoning for Profit: Bringing the Revisionist State Back in," International
Security 19:1 (1994), pp. 72-107.

9
Ibid; Amitav Acharya, "Will Asia's Past Be Its Future?" International Security 28:3 (Winter
2003/04), p. 151.

136
belief that China's influence is likely to grow bigger in the future - two inducements

identified by Schweller as prime drivers of bandwagoning - have motivated Malaysia

to embrace /imited-bandwagon ing. None of these factors, however, have encouraged

Singapore to move in the same direction.

On a comparative basis (see Table 4.2), it can be observed that Thailand shares

Malaysia's position in embracing LB, whereas Indonesia concurs with Singapore in

rejecting LB as an option (albeit for different reasons). Malaysia's LB behavior is

reflected in its elites' willingness to accord deference to Beijing over the latter's core

interests (e.g. "One China" Policy), as well as their inclination to see Beijing as a

partner in pushing for certain common foreign policy goals. In this regard, Thailand

has similarly worked together with Beijing to push for various Thai-initiated

programs, such as the Asian Cooperation Dialogue (ACD). Besides, perhaps as a

reflection of Thai diplomatic culture of bending-with-the-wind, Bangkok has shown

an even greater readiness to display allegiance to China over Taiwan, Tibet, and Falun

Gong. 10 Indonesia's policy, by contrast, does not exhibit clear elements of LB. First,

except in economic and functional domains, Indonesia does not forge major policy

coordination with China in the same way that Thailand and Malaysia have

collaborated with China over ACD and East Asian cooperation, respectively. Second,

Jakarta does not - and probably would not - demonstrate a readiness to give

deference to Beijing in the same way that Bangkok and Kuala Lumpur have

occasionally chosen to do. Indonesia's position thus comes closer to that of

Singapore. However, unlike Jakarta who rejects LB primarily because of its elite
11
perception of Beijing as a "natural geopolitical rival", Singapore's no-

bandwagoning stance is chiefly due to its leaders' acute sensitivity over autonomy, as

10
Anthony Smith, "Thailand's Security and the Sino-Thai Relationship," China Brief5:3 (2005), p. 3.

11
Michael Leifer, "Indonesia's Encounters with China and the Dilemmas of Engagement," in Johnston
and Ross, Engaging China, p. 99.
well as their wariness about the long-term ramifications of a powerful China, as will

be discussed in Chapter 8.

While the above policy thrusts connote more persuasive and profit-maximizing

elements, this is not the case for the remaining two.

Dominance-denial. This policy is aimed at preventing and denying the emergence of a

predominant power that may exert undue interferences to smaller states.12 Its modus

operandi is political in nature, wherein the smaller actors, either individually or

collectively, seek to attain this goal by: (a) involving other powers in regional affairs;

and (b) developing their own resilience and strengthening their collective diplomatic

clout. It is different from pure-balancing in two aspects. First, it is about balance-of-

political-power, whereas the latter balance-of-military-power. Second, pure-balancing

is pursued with a specific country (or bloc) in mind, whereas dominance-denial may

not be targeting at a particular power.

Dominance-denial is adopted by all founding ASEAN members, as evidenced

by their common desire to maintain a balanced - albeit not necessarily equal -

relationship with all the major powers. This policy has been in practice since the Cold

War days, particularly after the reduced Western commitments in the late 1960s.

Dominance-denial and binding-engagement can be seen as two different sides

of the same coin. They are related because both are aimed at influencing a major

power by binding it in an institutional web that involves other big actors. However,

they are two distinctive approaches because unlike binding-engagement that seeks to

change the great power's action by a persuasive point ("let's preserve the status quo

together, because you too have a stake in it"), dominance-denial seeks to do the same

12
This term is adapted from "counter-dominance," as coined by Acharya, "Containment, Engagement,
or Counter-Dominance?" pp. 129-51.
with an implicitly more confrontational message ("don't dictate us in a hegemonic

way, or we will have no choice but to move closer to other powers"). As shall be

discussed, given that ASEAN states' own capabilities will never be adequate to

guarantee an effective binding-engagement policy, other powers' presence is essential

to induce China to stay on the engagement course and to behave in a restrained way.

ASEAN states' effort to ensure other big powers involvement in the ARF and the East

Asia Summit (EAS) is a case in point.

Indirect-balancing. This is a policy where a state makes military efforts to cope with

diffuse uncertainties (as opposed to a specific threat in the case of pure-balancing) by

forging defense cooperation and by upgrading its own military. It is different from

"soft-balancing", which refers to the act of maintaining informal military alignment

for balancing purpose.

There are reasons why the present study uses "indirect" rather than "soft" to

describe ASEAN states' balancing acts. To begin with, the issue of informal vs.

formal military cooperation between ASEAN states and Western powers is largely

attributable to factors other than the rise of China, and is therefore less relevant in

reflecting the states' China policies. By contrast, the distinction of indirect vs. direct

balancing may usefully reflects a state's threat perception vis-a-vis Beijing. That is, if

and as soon as China is viewed as an unambiguous threat, the state is expected to

make military preparations specifically targeted at China. If this happens, it will

signify a shift from indirect- to direct-balancing. Presently, however, there is no

indication that the ASEAN states are seeing China as the clear-and-present threat,

and/or are developing defense procurement in parallel to the pace of China's military

modernization. Hence, it seems reasonable to suggest that the states' postures still

remains one of indirect-balancing. I will elaborate on this in Chapters 7-8.

139
 These five components indicate that ASEAN states' hedging behavior is, in

essence, a two-pronged approach. It is two-pronged because it operates by

simultaneously pursuing two sets of opposite policies, which can be labeled as "return

-maximizing" and "risk-contingency" options. The first set - consists of economic-

pragmatism, binding-engagement, and limited-bandwagoning - allows the smaller

states to reap as much economic, diplomatic, and foreign policy profits as possible

from the big power when all is well. It is counteracted by the risk-contingency set,

which, through dominance-denial and indirect-balancing, aims at reducing the states'

loss if things go awry. Hedging, thus, is a strategy that works for the best and prepares

for the worst. A policy that focuses on merely return-maximizing without preparing

for risk contingency - and vice versa - is not a hedging strategy.

By concurrently adopting the opposite options, small states such as Singapore

and Malaysia aim to offset risks that may arise from the uncertain regional order. No

matter how power structure will evolve - whether the U.S. commitment will remain

strong; whether Beijing will turn revisionist; whether China will become weak and

will no longer be seen as an alternative power center; whether China will grow

stronger and become a provider of regional public goods; or whether China will co-

exist peacefully with Japan and India - the states hope that their act of counteracting

one transaction against another will serve to insure their long term interests.

The assertion that the original ASEAN members have all adopted a hedging

position does not imply that they are pursuing a common strategy vis-a-vis China. Far

from it, as is reflected in the earlier discussion on limited-bandwagoning, there are in

fact subtle differences across the state reactions. This will be further elaborated below.

Table 4.1 summarizes the functions and modus operandi for each of the policy

options (dependent variables). Table 4.2 illustrates Southeast Asian states' responses

to the rising China along the spectrum of power-rejection and power-acceptance.

140
 TABLE 4.1:
SMALLER STATES' POLICY OPTIONS IN RESPONSE TO POWER
ASYMMETRY

Functions Modus Operandi/ Indicators

BANDWAGONING To win present or future rewards from Forging a military alliance with the big power,
(Pure form) a big power coordinating key foreign and defense policies

"Profit first"

LIMITED To reap present or future foreign Forming a kind ofpolitical partnership with the
BANDWAGONING * policy rewards from a big power, but power, coordinating external policies in selective
with a consciousness to avoid the loss areas, as well as giving deference voluntarily
"Grasp the opportunity of its autonomy and an erosion in its
for profit, but existing relationship with another
cautiously" dominant power

BINDING- To bind a big power in institutions in Creating and maintaining regularized institutional
ENGAGEMENT order to increase voice opportunities links with a big power through bilateral and
and to socialize the power with the multilateral diplomatic platforms
"Socialization matters " established norms, for the ultimate
goal of encouraging it to behave in a
responsible and restraint way

ECONOMIC To maximize economic benefits from Establishing and maintaining direct trade and
PRAGMATISM its direct trade and investment links investment links with the big power, as well as
with a big power, regardless of any entering into bilateral and regional economic
"Business first" political differences or problems cooperation (such as an FTA) with that power

DOMINANCE To deny and to prevent the emergence Making use of other powers' balancing efforts as a
DENIAL of a predominant power who is capable countervailing force to offset the growing clout of
of dictating hegemonic terms to the big power, by ensuring the involvement of other
"Ascendancy is okay, smaller states powers in regional affairs, and by giving political
but not dominance " support to others' alliances and armaments

INDIRECT To prepare for diffuse and uncertain Maintaining military ties (either a formal alliance or
BALANCING strategic contingencies informal military cooperation) with other power, and
modernizing its own military, without explicitly
"Just in case " identifying any specific target of its military efforts

BALANCING To check and counter-balance the Entering into a military alliance with a third power,
(Pure form) growing capability of a specific power and upgrading its own armament program, with a
specific source of threat and an explicit target of its
"Security first" military actions

TABLE 4.2:
ASEAN STATES' RESPONSES TO THE RE-EMERGING CHINA
Balancing
Countries Strategy
(Pure form)

Malaysia
Singapore
Thailand
Indonesia

t
Degree of Power Rejection Neutrality Point Degree of Power Acceptance
Ke
Full adoption
Partial adoption

141
 Explanatory Variables and Hypotheses

What do smaller states do when faced with an increasingly strong and/or potentially

threatening power? Do similarly-situated states react differently? How so, and why

so? This section identifies the explanatory variables and sets forth the hypotheses for

this study. To this end, I will first explicate the arguments and problems of the

dominant neorealist paradigm, before proposing an alternative model that, in my

view, is more pertinent to account for the substance and variation in smaller states'

alignment choices in the face of a rising power.

The Dominant Paradigm: The Neorealist Explanation

The neorealist model - as developed by Waltz and his followers - focuses on

"structural forces" in accounting for international outcomes. While Waltz has

emphasized that his balance-of-power theory is intended to be a "systems theory of

international politics" and not a "theory of foreign policy",13 this does not stop his

followers from building on his theoretical formulations to explain state actions.14

Snyder and Posen, for instance, have adopted a neorealist approach to analyze states'

alliance behavior and military doctrine, respectively.15 Despite their differences, most

neorealists share four common assumptions. First, states are unitary, rational, and

13
Kenneth Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979), esp. pp.
71-3 & pp. 121-3. See also his "Reflections on Theory of International Politics: A Response to My
Critics," in Robert Keohane, e d , Neorealism and Its Critics (New York: Columbia University Press,
1986), pp. 322-45.

14
Michael Mastanduno has attempted to justify the appropriateness and usefulness of using such a
structural theory in explaining the foreign policy behavior of particular states, by arguing that
"international structure provides opportunities and constraints that shape state behavior significantly,
even if they do not determine it entirely." See Mastanduno, "Preserving the Unipolar Moment: Realist
Theories and U.S. Grand Strategy After the Cold War," in Ethan B. Kapstein and Michael Mastanduno,
e d s . Unipolar Politics: Realism and State Strategies After the Cold War (New York: Columbia
University Press, 1999), p. 140. Italics added.

15
Glenn H. Snyder, "Alliance Theory: A Neorealist First Cut," in Robert L. Rothstein, e d . The
Evolution of Theory in International Relations: Essays in Honor of William T.R. Fox (Columbia:
University of South Carolina Press, 1991); Synder, Alliance Politics (Ithaca: Cornell University Press,
1997); Barry R. Posen, The Sources of Military Doctrine (Ithaca: Cornell University Press, 1984).

142
"functionally-alike" actors who seek to preserve their own survival. Second, security

is the highest goal in anarchy. Third, in a self-help system without any central

authority to enforce rules at the international level, states tend to rely more on military

force than non-military means (e.g. institutions) to pursue their interests. Fourth, state

behavior is driven chiefly by the systemic distribution of power, rather than the unit-

level intrinsic qualities of states.16

These assumptions lead neorealists to pay attention to threats and aggregate

capabilities in explaining states' alignment behavior. From the neorealists' viewpoint,

the anarchic nature of international system will compel security-seeking states to be

constantly vigilant about the possibilities and consequences of violence in

international relations. As observed by Waltz, "Because some states may at any time

use force, all states must be prepared to do so - or live at the mercy of their militarily

more vigorous neighbors. Among states, the state of nature is a state of war." 17 In the

shadow of violence, states as rational actors will tend to emphasize capabilities more

than intentions. This is because, in the words of Jervis: "Minds can be changed, new

leaders can come to power, values can shift, new opportunities and dangers can

arise."18 In view of the uncertainties about others' future intentions as well as the

persistent possibilities of the use of force by stronger actors, neorealists thus expect

smaller states to perceive a big power with growing capabilities as a growing threat

regardless of its professed intentions; and expect them to turn to armament and

alliances to curb a potential hegemon before it becomes too powerful. To quote Waltz

16
Waltz, Theory of International Politics; Keohane, Neorealism and Its Critics; David A. Baldwin,
e d , Neorealism and Neoliberalism: The Contemporary Debate (New York: Columbia University
Press, 1993); Michael Brown, Sean M. Lynn-Jones, and Steven E. Miller, e d s . The Perils of Anarchy:
Contemporary Realism and International Security (Cambridge, MA: The MIT Press, 1995); John A.
Vasquez, The Power of Power Politics: From Classical Realism to Neotraditionalism (Cambridge:
Cambridge University Press, 1998), esp. Chapter 9.

17
Waltz, Theory of International Politics, p. 102.

18
Robert Jervis, "Cooperation under the Security Dilemma," World Politics 30:3 (January 1978), p.
168.

143
again: "As nature abhors a vacuum, so international politics abhors an unbalanced

power. Faced with unbalanced power, some states try to increase their own strength or

they ally with others, to bring the international distribution of power into balance."19

Neorealists consider international structure or the distribution of capabilities

across states as the key independent variable that will affect states' alignment

decisions - i.e. whether or not and in what way a state will choose to balance against a

rising power. In a neorealist model, the systemic factor is important not only because

it will have an effect on a given power's behavior (the greater the relative capabilities

of the big power, the greater the possibility for the power to use and take advantage of

its margin of superiority to advance its interests), but also because it will determine

the availability and reliability of any countervailing force that smaller states could

turn to for allied support. 20 In general, if effective coalition partners - who possess

"enough defensive or deterrent strength to dissuade adversaries from attacking"21 -

are available, smaller states are likely to join them and form an anti-hegemonic

alliance to contain a threatening power. This results in balancing behavior. However,

if smaller states "see no possibility of external assistance, accommodation through

alignment with the threatening power may be chosen as a last resort."22 This results

in bandwagoning behavior.

A neorealist model, thus, would posit that, all else being constant, the greater

the relative capabilities of a rising power, the greater the threat it will pose to its

19
Kenneth N. Waltz, "Structural Realism after the Cold War," International Security 25:1 (Summer
2000), p. 28.

20
On the possibilities and forms of "balancing coalition" in the unipolar system, see Pape, "Soft
Balancing against the United States"; Brooks and Wohlforth, "Hard Times for Soft Balancing"; Lieber
and Alexander, "Waiting for Balancing"; and T.V. Paul, "Soft Balancing in the Age of U.S. Primacy",
all appeared in International Security 30:1 (Summer 2005). See also Stephen G. Brooks and William
C. Wohlforth, World Out of Balance (Princeton: Princeton University Press, 2008), esp. Chapter 2.

21
Waltz, Theory of International Politics, p. 127.
22
Walt, "Alliance Formation and the Balance of World Power," p. 17.

144
surrounding states, and the greater the likelihood that the states will join anti-

hegemonic alliances - if available - in order to balance against the power and

preserve their own survival. But if such alliances are not available, smaller states are

likely to bandwagon with the power, in an effort to avoid complete subjugation and

avoid greater losses.

The Limits of Neorealist Model

Although the neorealist model does offer important insights by highlighting the

structural constraints of states' alignment choices, it suffers from three major flaws.

First, because of its assumptions that security is the highest goal and military

force the most (if not the only) reliable means for states, neorealism posits that

structural pressures will compel states to choose between balancing and

bandwagoning. Many of the scholarly works as discussed in Chapter 3, however, have

credibly demonstrated that states' policy choices are not confined to these two

options,23 Our earlier discussion on hedging has also suggested that smaller states can

and often do pursue policies that go beyond the oversimplified dichotomy of

balancing and bandwagoning. Having failed to sufficiently capture the range and

types of smaller states' policy options (the dependent variables), the neorealist model

is not likely to be able to aptly discern - let alone explain - the variation in policy

choices across countries and over time.

The second limitation of the neorealist model is that, while it correctly

conceives that states' alignment decisions are correlated with, and constrained by, the

international distribution of capabilities, it however has stopped short of providing a

23
See Paul Schroeder, "Historical Reality vs. Neo-realist Theory," International Security 19:1
(Summer 1994), pp. 108-48; Schweller, "Managing the Rise of Great Powers"; Thomas J. Christensen
and Jack Snyder, "Progressive Research on Degenerate Alliances," in John A. Vasquez and Colin
Elman, e d s . Realism and the Balance of Power: A New Debate (Upper Saddle River, NJ: Prentice
Hall, 2003), p.70; Acharya, "Containment, Engagement, or Counter-Dominance?"; Chong, Revisiting
Responses to Power Preponderance.

145
detailed account as to how the correlation works. The model simply assumes that

structural pressures associated with anarchy will lead states to feel threatened by the

growing capabilities of a big power, and that the survival instinct will eventually

motivate - or necessitate - the states to balance against it by forming alliances and/or

upgrading their armaments. The formation of threat perceptions at the policymaker

level, in effect, is treated as a "black box. " This problem has weakened neorealism's

ability to address several issues that are central to explaining a state's alignment

choices, most notably: Why do certain countries feel more threatened by a rising

power than others? Why is it that some smaller states are alarmed by the growing

power of a neighboring giant, while others are attracted to it, seeing it not so much as

a threat but as an opportunity? Why is it that the same structural change has often

induced dissimilar responses among similarly situated states?2A

Walt's balance-of-threat theory - despite its value in refining Waltz's

balancing propositions - provides only a partial remedy to these issues. Walt

convincingly argues that states form alliances to balance against perceived threats and

not necessary against power; and that although power (or aggregate capabilities) is an

important part of the equation, it is only one of four factors affecting a state's level of

perceived threat. The other factors, as noted, are: geographic proximity, offensive

power, and aggressive intentions. 25 Walt's theory, by stressing both capabilities and

intentions, is a significant advancement over Waltz's. It is however not without

problems. Alastair Iain Johnston suggests that Walt's theory is "fairly indeterminate",

as "it does not provide a priori aggregate weighting system for the four key variables.

Each variable could lead to predictions about behavior that contradicted the other."26

24
I thank Francis Fukuyama for guiding me to focus on these issues.

25
Walt, "Alliance Formation and the Balance of World Power"; Walt, The Origins of Alliances.

26
Alastair Iain Johnston, "Realism(s) and Chinese Security Policy in the Post-Cold War Period," in
Kapstein and Mastanduno, Unipolar Politics, pp. 284-5.

146
For instance, as Walt himself acknowledges, "proximate threats can lead to balancing

or bandwagoning." 27 Consequently, the questions remain unresolved: Why is it that

some countries see a powerful neighbor as a source of threat to be balanced against,

while others see it as a source of strength to be bandwagoned with? What causes

smaller states to position themselves vis-a-vis the big powers the way they do? Do

these questions suggest that threats alone do not determine a state's alignment

choices?

This leads to the third, and perhaps the most fundamental limitation of the

Waltzian and Waltian propositions. Neorealism, essentially, is premised on the

condition that states are confronted by a direct security threat; and as such it may not

be as pertinent or applicable to accounting for situations in which states are not

threatened by any clear and present military danger. In the latter condition, it seems

plausible to suggest that states may pursue and prioritize policy goals other than

military security (e.g. prosperity and autonomy), and that the state behavior may be

driven more by the imperative of profit-maximizing than threat-reduction. These are

not trivial matters, considering that a desire to gain rewards, profits, and promises has

always been one of the key motivating forces of human actions, alongside a desire to

avoid and minimize threats. 28 As observed by David Baldwin, "The need for thinking

about promises in politics is at least as great as the need for thinking about threats -

perhaps greater." 29 By emphasizing on threat-reduction alone, neorealism has

27
Walt, The Origins of Alliances, p. 23.

28
David A. Baldwin, "The Power of Positive Sanctions," World Politics 24:1 (Oct 1971), pp. 19-38;
Richard Rosecrance, "Reward, Punishment, and Interdependence," The Journal of Conflict Resolution
25:1 (Mar 1981), pp. 31-46; Thomas W. Milburn and Daniel J. Christie, "Rewarding in International
Politics," Political Psychology 10:4 (Dec 1989), pp. 625-45; James W. Davis, Jr., Threats and
Promises: The Pursuit of International Influence (Baltimore and London: The Johns Hopkins
University Press, 2000).

29
David A. Baldwin, "Thinking about Threats," The Journal of Conflict Resolution 15:1 (Mar 1981),
p. 72.

147
overlooked and obscured the importance of profit-seeking motive in driving state

actions.

It is important to pay attention to both the positive and negative incentives of

state behavior, because both have implications for an actor's alignment choices. For

instance, when a smaller state does not view a big power as an instantaneous threat

but an immediate economic and/or political opportunity, there is little reason to expect

the state to balance against the power; rather, it seems more logical for the state to

engage or even to bandwagon - at least partially - with the power, in the hope of

maximizing whatever benefits that can be acquired from the Gulliver. Schweller thus

argues that "positive sanctions" (actual or potential rewards) are "the most effective

means to induce bandwagoning behavior. States, like delegates at party conventions,

are lured to the winning side by the promise of future rewards." 30 Earlier works by

Barnett and Levy, David, Larson, and Schroeder have similarly highlighted the

positive incentives and opportunistic motives of states' alignment behavior.31

Perhaps as an indicator of the above problems, the neorealist propositions do

not square well with the post-Cold War reality both at the global and regional levels.32

Given the research objective of this study, I shall focus on the case of Southeast Asian

states' responses to a rising China. As will be made clear in the subsequent chapters,

while China's absolute and relative capabilities have grown steadily over the past two

30
Schweller, "Bandwagoning for Profit," pp. 88-9.
31
Michael N. Barnett and Jack S. Levy, "Domestic Sources of Alliances and Alignments: The Case of
Egypt, 1962-1973," International Organization 45:3 (Summer 1991), pp. 369-95; Steven R. David,
Choosing Sides: Alignment and Realignment in the Third World (Baltimore, MD: The Johns Hopkins
University Press, 1991); Deborah Welch Larson, "Bandwagoning Images in American Foreign Policy:
Myth or Reality?" in Robert Jervis and Jack Snyder, eds., Dominoes and Bandwagons: Strategic
Beliefs and Great Power Competition in the Eurasian Rimland (New York: Oxford University Press,
1991); Schroeder, "Historical Reality vs. Neo-realist Theory".

32
For a sampling see Kapstein and Mastanduno, Unipolar Polities', G. John Ikenberry, ed., America
Unrivaled: The Future of the Balance of Power (Ithaca: Cornell University Press, 2002); Brooks and
Wohlforth, World Out of Balance', Johnston and Ross, eds., Engaging China', David Kang, "Getting
Asia Wrong: The Need for New Analytical Frameworks," International Security 27:4 (Spring 2003),
pp. 57-85; Amitav Acharya, "Will Asia's Past Be Its Future?" International Security 28:3 (Winter
2003/04), pp. 149-64.

148
decades, such a structural change has not pushed the smaller states in the region to opt

for balancing and bandwagoning in the way neorealism prescribes and predicts. While

it is true that most states do maintain some form of military ties with the Western

powers (most notably the U.S.), these efforts do not necessarily constitute a balancing

strategy in the neorealist sense. This is because the existence of such cooperation

actually predates the rise of China, 33 and there is no clear indication that the states'

military modernization has been primarily stimulated by, and accelerated in tandem

with, the growth of China's power. 34 In a similar vein, while Southeast Asian states

have all chosen to engage China economically and diplomatically, this gesture should

not be confused as bandwagoning. Economic cooperation and diplomatic engagement

are chiefly motivated by a pragmatic incentive to gain economic and diplomatic

35

profit; by themselves they do not constitute an act of power acceptance.

Bandwagoning, by contrast, reflects a readiness on the part of smaller states to accept

- voluntarily or otherwise - the larger partner's power ascendancy; and such power

acceptance often takes the forms of political and military alignment, as noted.

Empirically, however, none of the states have aligned militarily with China. Rather,

our preliminary observations reveal that the regional states have adopted a mixture of

policies that lie in between balancing and bandwagoning, and that there are subtle

differences across the states 'perceptions and policies toward China.

These observations lead us to suggest that if the same structural change has
33
Acharya, "Containment, Engagement, or Counter-Dominance?", p. 140.

34
Herbert Yee and Ian Storey, e d s . The China Threat: Perceptions, Myths and Reality (London:
RoutledgeCurzon, 2002); Brantly Womack, "China and Southeast Asia: Asymmetry, Leadership and
Normalcy," Pacific Affairs 76: 4 (Winter 2003-04), pp. 529-48; David C. Kang, China Rising: Peace,
Power, and Order in East Asia (New York: Columbia University Press, 2007); David M. Lampton, The
Three Faces of Chinese Power: Might, Money, Mind (California: University of California Press, 2008),
Chapter 5.

35
Amitav Acharya has rightly cautioned that engagement cannot be viewed as bandwagoning "because
it does not involve abandoning the military option vis-a-vis China." He also stresses that economic
self-interest should not be confused with bandwagoning because economic ties "do not amount to
deference." See Acharya, "Will Asia's Past Be Its Future," pp. 151-2.

149
induced dissimilar perceptions and policy responses among similarly-situated states,

then there must have some intervening factors at work, which affect the states' policy

choices. Considering the discrepancy between the neorealist model and the empirical

observations, this study proposes an alternative framework to establish the causal

links between structural change and states' alignment choices in the face of a rising

and proximate big power (thus uncovering the black box of threat- and opportunity

perceptions formation).

The Alternative Explanation: The Domestic Legitimation Model

As an alternative to the neorealist explanation, this model treats domestic legitimation

- the manner in which state elites seek to justify and consolidate their moral authority

to govern at home - as a key intervening variable between structural pressures facing

a state and the state's ultimate choice of strategies to grapple with the challenges and

opportunities in the face of a rising power. The model is illustrated in Figure 4.1

below.

The Domestic Legitimation (DL) model is premised on four core assumptions.

First, states do not make foreign policy choices, governing elites do. Second, ruling

elites are concerned primarily with their own domestic political survival.36 As such,

their policy actions are geared towards mitigating all forms of risks - security,

economic, and political - that may affect their capacity to exert control over the

people and the territory they claim jurisdiction.37 Third, the representation of risks -

36
W. Howard Wriggins, The Ruler's Imperative: Strategies for Political Survival in Asia and Africa
(New York: Columbia University Press, 1969); Edward E. Azar and Chung-In Moon, eds., National
Security in the Third World: The Management of Internal and External Threats (Hants, England:
Edward Elgar, 1988); David, Choosing Sides.

37
Sukhumbhand Paribatra and Chai-Anan Samudavanija, "Internal Dimensions of Regional Security
in Southeast Asia," in Mohammed Ayoob, ed., Regional Security in the Third World (Boulder, CO:
Westview, 1986); Mohammed Ayoob, "The Security Problematic of the Third World," World Politics
43 (January 1991), pp. 257-83; Muthiah Alagappa, ed., Asian Security Practice: Material and
Ideational Influences (Stanford: Stanford University Press, 1998); David I. Hitchcock, "Internal
Problems in East Asia," The Washington Quarterly 21:2 (Spring 1998), pp. 121-34.

150
which risks will be identified and prioritized as foreign policy "problems" 38 - is

neither given nor fixed, but is constantly shaped by the manner in which the elites

seek to justify their domination by acting in accordance with the very foundations of

their authority at a given time. Fourth, such governance foundations do not merely

refer to elite compliance with liberal-democratic norms, but also their ability to

preserve security and internal cohesion, to deliver economic growth, to uphold

sovereignty, and to promote a rationalized ideal that is peculiar to a particular country

(e.g. the imperative of "coping with vulnerabilities" in an intricate geopolitical

environment, the necessity of "maintaining ethnic balance" in a multi-racial

society). 39 It is within the context of inner justification that elites evaluate the

ramifications of a rising power (or any external factor) and make policy choices.

The model thus hypothesizes that a smaller state's strategy toward a rising

power is driven not so much by the concern over the big power's growing relative

capabilities per se; rather, it is motivated more by the internal process of regime

legitimation in which the ruling elite evaluate - and then utilize - the opportunities

and challenges of the rising power for their ultimate goal of consolidating their

authority to govern at home.

Figure 4.1 below illustrates the Domestic Legitimation (DL) model. It demonstrates

the causal mechanisms that link "structural pressures" (independent variable) and

38
For analyses on the issues surrounding problem representation in foreign policy, see Donald A.
Sylvan and James F. Voss, e d s . Problem Representation in Foreign Policy Decision Making
(Cambridge: Cambridge University Press, 1998); Steve Smith, "Foreign Policy is What States Make of
It: Social Construction and International Relations Theory," in Vendulka Kubalkova, e d . Foreign
Policy in A Constructed World (New York & London: M.E.Sharpe, 2001), pp. 38-55.

39
On inner justification of the "right to govern," see Max Weber, "Legitimacy, Politics, and the State,"
in William Connolly, e d . Legitimacy and the State (New York: New York University Press, 1984), pp.
32-62; David Beetham, The Legitimation of Power (London: MacMillan, 1991); Muthiah Alagappa,
e d . Political Legitimacy in Southeast Asia: The Quest for Moral Authority (Stanford: Stanford
University Press, 1995).

151
states' "foreign policy choices" (dependent variable). The model treats "domestic

legitimation" as an intervening variable, for its role in connecting the independent

variable and the outcomes of policy choices (variation being explained). There are

three major variations in dependent variable that the model seeks to explain: (a)

balancing behavior that represents a state's choice in rejecting a power ascendancy;

(b) bandwagoning behavior that represents an action in accepting a power

ascendancy; and (c) hedging behavior that represents a state's decision in taking a

third path that essentially accommodates and/or utilizes rather than completely rejects

or accepts the power ascendancy it is confronted with. Within hedging behavior, there

are two sub-variations: heavy-hedging and light-hedging. The former refers to a

policy that emphasizes contingency measures (i.e. dominance-denial and indirect-

balancing) more than return-maximizing options (economic-pragmatism, binding-

engagement, and limited-bandwagoning). The latter, by contrast, is a policy that

stresses return-maximizing approaches more than risk-contingency actions.

In the DL Model, an elite's policy choice depends on the pathways of

legitimation that the elite uses to consolidate its domestic authority. To the extent that

the pathways of legitimation require the elite to utilize opportunities provided by

power ascendancy, and to the extent that the power's action helps rather than hinders

the legitimation process, then the state is expected to emphasize return-maximizing

actions more than contingency measures vis-a-vis the big power. However, if the

pathways of a state's legitimation are challenged by the rise of the big power, and if

the power's action further complicates rather than consolidates that legitimation

process, then we should expect the state to stress risk-contingency more than return-

maximizing options.

152
 FIGURE 4.1:
THE DOMESTIC LEGITIMATION (DL) MODEL

Independent Variable Intervening Variable Dependent Variable

(Foreign Policy Choices)

Power Rejection: A
STRUCTURAL DOMESTIC
CONDITIONS LEGITIMATION f
Balancing Strategy a.
i r
The need to adjust one A process in which the Between k Heavy i *o
V
self in order to cope ruling elite seeks to Rejection and Hedging
with the changes in the justify, preserve, and
structural factors (the enhance its moral
Acceptance: I?
distribution of authority to rule at
capabilities across the home HEDGING > Light
big powers, the level of STRATEGY Hedging
individual powers' I |
commitment to involve
\
si
in regional affairs, the Power Acceptance:
1' s
N' 3
pattern of relations Bandwagoning Strategy
among the powers, the 1'
primary goals of the t
powers' regional
involvement)

Falsification of Hypotheses

If the neorealist premises hold true, then we should expect that a change in the

distribution of power - in this case, an increase in China's relative capabilities - will

induce a greater level of apprehension on the part of the smaller states, which, in turn,

will compel them to strengthen their alliance and armament for balancing China, in

order to preserve and maximize their own security. We should expect this particularly

in cases where the state was threatened by the big power in the past, and it still has

unresolved security problems (like territorial disputes) with the power. In such cases,

we should expect the state to prioritize security over other goals (e.g. economic

wellbeing), and to emphasize military over non-military means in coping with the

rising power.

On the other hand, if the DL propositions are anything to go by, then we

should expect that a growth in China's relative strengths may not necessarily have

inherent effect on the smaller state reactions; rather, whether or not the structural

153
change will cause trepidation in the states, will depend on whether the states' ruling

elite perceive the power as a boon or a bane for their legitimation efforts. All things

being equal, in instances in which the role of the big power is perceived to be positive,

the state is expected to accept the power's growing ascendancy. Conversely, in

instances in which the big power's growing might is viewed as a challenge to elite

legitimation, the state is expected to counter-check it. Finally, in instances in which

the ramification of the power's rise is perceived to be mixed or unclear, then the state

is expected to take a more intricate approach, the substance of which will depend on

the ordering of the elite's legitimation bases of the day. For instance, if the elite's

current legitimation relies more on the imperative of prosperity-maximizing than

security-seeking, then the state is expected to highlight economic and political

benefits that can be tapped from the power, while downplaying any security concerns

it may have about the giant.

METHODS AND DATA

This is a small-N study. It adopts the approach of "structured, focused comparison of

cases"40 to address the question of how and why similarly-situated smaller states

respond to a rising power the way they do.

Our selected cases are Malaysia and Singapore's foreign policies toward

China during the post-Cold War era. For comparison purpose, the policies of other

Southeast Asian states will be brought into our discussion whenever necessary and

wherever possible. Considering that the two selected cases share similarities in their

internal and external attributes but show dissimilar policy choices, we have adopted

the "method of difference" as described by John Stuart Mill.41 Under this method,

40
Alexander L. George and Andrew Bennett, Case Studies and Theory Development in the Social
Sciences (Cambridge, MA: The Belfer Center for Science and International Affairs, 2005).

41
On "method of difference", see Charles C. Ragin, The Comparative Method (University of

154
investigation is focused on whether different values of the dependent variable (i.e. the

variation in the states' policies toward China) correspond across the selected cases

with variation in the causal variables. The strength of this method, as noted by Van

Evera, is that by picking cases with similar background characteristics, it substantially

reduces the number of candidate causes: "the more similar the cases, the fewer the

candidates, making real causes ... easier to spot." 42 This method - a controlled

comparison - will be supplemented by the procedure of "process-tracing" (a within-

case analysis). According to George and Bennett, this procedure is an indispensable

tool for performing two major tasks in theory development and testing: first, to

minimize the possibility of leaving out important factors from the list of candidate

independent variables; and second, to identify and assess the possible intervening

causal process (the causal mechanism) between a candidate independent variable(s)

and the variance in dependent variables.43

Rationale for Case Selection: Why Malaysia and Singapore?

Malaysia and Singapore are selected as the cases for this study for two main reasons:

their comparability and importance in illustrating the dynamics of smaller states'

strategies in general and Southeast Asia-China relations in particular.

Importance: Despite their size, Malaysia and Singapore have often punched above

their weight in regional affairs and in ASEAN-China relations. Both are among the

California Press, 1989), esp. Chapter 3; Arend Lijphart, "Comparative Politics and the Comparative
Method," American Political Science Review 65:3 (September 1971), pp. 682-93; Harry Eckstein,
"Case Studies and Theory in Political Science," in Fred Greenstein and Nelson Polsby, eds., Handbook
of Political Science, Vol. 7 (Reading: Addison-Wesley, 1975), pp. 79-138; John S. Odell, "Case Study
Methods in International

42
Stephen Van Evera, Guide to Methods for Students of Political Science (Ithaca & London" Cornell
University Press, 1997).
43
George and Bennett, Case Studies and Theory Development.

155
founding and core members of ASEAN. Since the inception of the regional

organization in 1967, the two countries - either in conjunction with others like

Indonesia and Thailand or on their own - have at different stages played a pivotal role

in advocating and advancing certain key initiatives that have shaped the dynamics and

direction of regional development. These initiatives include: the idea of regional

neutralization, the enlargement of ASEAN, the imperative to retain U.S. military

presence, the necessity to create a regional multilateral security forum in the post-

Cold War Asia Pacific (which resulted in the creation of the ASEAN Regional

Forum), the proposal to strengthen inter-regional cooperation (which led to the

creation of the Asia-Europe Meeting and the Forum for East Asia-Latin America

Cooperation), and the bid to promote East Asian cooperation (which contributed to

the creation of ASEAN Plus Three and the East Asia Summit).

The two countries have also played a significant part in the development of

ASEAN-China relations. Politically, Malaysia was the first ASEAN state to establish

diplomatic relations with China during the Cold War. In the post-Cold War era,

Malaysia and Singapore have been among the most enthusiastic to engage China at

both bilateral and regional levels. Economically, Singapore and Malaysia have long

been China's two largest trading partners in the ASEAN region. Their combined

bilateral trade with China has been continuously representing almost half of the total

ASEAN-China trade volume every year. Socially, the two countries are also among

those who have kept increasingly close socio-cultural and people-to-people exchanges

with China.

This selection does not imply that other ASEAN states are less important.

Countries like Indonesia, Thailand, and Vietnam all represent important cases in the

evolution of Southeast Asia-China relations. Nevertheless, these cases are not

included in this study simply because they are unique in their own right. Indonesia's

156
China policy is underlined by a sense of "regional entitlement" among its elite, which

prompts Jakarta to view Beijing as a geopolitical rival and a threat to its "rightful

place" in Southeast Asia. 44 Thailand's China policy is influenced by its experience in

forming a de facto alliance with Beijing to fight against Hanoi during the Indochina

conflict 45 Vietnam's China policy is underpinned by its geographical contiguity and

historical memory of thousand-year Chinese domination 46 Each of these elements is

sui generis, making these cases less comparable with other ASEAN states like

Malaysia and Singapore.

Comparability: Except for the size of their territories and populations, Malaysia and

Singapore are comparable in many key respects. These include:

o Geographical Location: Situated on the southern extremity of the Asian

continent between the Indian Ocean and the Strait of Malacca on the west and the

South China Sea and the Gulf of Thailand on the east, Malaysia and Singapore

occupy a strategic location on an important international sea route. They are

geographically proximate but not immediately adjacent to China, unlike Burma, Laos,

Vietnam, and the Philippines who share land and/or sea borders with the giant to the

north.

o Historical Roots: For much of their early history, the two were part and parcel

of the same political entity, whose shapes and fates had been tied to the rise and fall

44
Leifer, "Indonesia's Encounters with China and the Dilemmas of Engagement."

45
Sukhumbhand Paribatra, From Enmity to Alignment: Thailand's Evolving Relations -with China
(Bangkok, Institute of Security and International Studies, Chulalongkorn University, 1987).

46
Brantly Womack, China and Vietnam: The Politics of Asymmetry (Cambridge: Cambridge
University Press, 2006).

157
of the successive empires and kingdoms in Southeast Asia, and later, the big powers

of the day. They were part of Srivijaya, a Buddhist maritime empire with its capital at

Palembang in eastern Sumatra which exercised suzerainty over much of the Malay

Archipelago from the seventh to the thirteenth centuries. The area then came under

the domination of the Java-based Hindu Majapahit Empire, until the rise of Malacca

as a preeminent trading port in the fifteenth century.47 The Malacca kingdom - which

became a sultanate in 1414 when its founder Parameswara converted to Islam — is

widely regarded as the "identifiable starting point for Malay history."48 From 1403-

1433, Malacca's first three rulers forged close relations with Ming China, with an eye

not only to gaining economic benefits, but also to seeking protection to ward off

external threats, particularly from Siam and Java.49 For the next century or so,

Malacca thrived on extrepot trade, commanding the major trading routes between

India and China and establishing itself as the most important port in the region.

Malacca's glorious days, however, ended after the arrival of the European powers. It

was colonized in turn by the Portuguese (1511-1641), Dutch (1641-1795), and British

(1795-1957). In 1819, Stamford Raffles acquired Singapore (formerly known as

Temasek) from the Johor Sultanate (a successor state of the Malacca sultanate), and

47
Nicholas Tarling, The Cambridge History of Southeast Asia (Cambridge: Cambridge University
Press, 1999); O.W. Wolters, History, Culture, and Region in Southeast Asian Perspectives (Singapore:
Institute of Southeast Asian Studies, 1982).

48
Historians Barbara Watson Andaya and Leonard Y Andaya attribute this view to the lack of concrete
information on the pre-1400 Malay Peninsula. They, however, caution that Malacca's development
"cannot be explained unless one realizes that behind the splendour of its court and the vigour of its
commerce lay traditions of trade and government that had evolved centuries. The story of Malaysia
does not therefore begin at Melaka but stretches back deep into the past." See Andaya and Andaya, A
History of Malaysia, 2 nd edition (Honolulu: University of Hawai'i Press, 2001), p. 7.

49
Wang Gungwu observes that Malacca's relationship with Ming China was a mutually beneficial one:
"Malacca needed help against Siam and China needed a base for fleets to the Indian Ocean." He adds
that "after 30 years of Chinese protection, Malacca was obviously ready to look after itself and it did so
with increasing confidence and success for the remainder of the century." See Wang, "The First Three
Rulers of Malacca," Journal of the Malaysian Branch of the Royal Asiatic Society 41:1 (July 1968), p.
22. See also Merle Calvin Ricklefs, A History of Modern Indonesia since C. 1200, 3rd edition
(Stanford: Stanford University Press, 1993), p. 23; Geoff Wade, "Melaka in Ming Dynasty Text," in
MBRAS, Southeast Asia-China Interactions (Kuala Lumpur: The Malaysian Branch of the Royal
Asiatic Society, 2007), pp. 336-7.

158
set up a trading post there for the British East India Company. In 1824, the English

and Dutch signed a treaty, establishing their spheres of influence by using the Straits

of Malacca as the demarcation line, thereby laying the basis for the present boundary

between Malaysia and Indonesia. By the early twentieth century, the Malay states on

the peninsula - including those once ruled by Siam, save for Patani - all fell one by

one under British control.

British rule was interrupted during World War II, when Japanese forces

invaded from the north and captured the "impregnable" island fortress of Singapore

by February 1942. The Japanese occupation (1942-1945) was resisted by the Malayan

Communist Party (MCP), whose members were predominantly ethnic Chinese. After

the war, the British returned to Malaya and soon announced plans for a Malayan

Union, which would transfer the sovereignty of the rulers of the Malay states to the

British Crown and establish a common Malayan citizenship, regardless of race. The

plans triggered intense Malay nationalism, and led on to the formation of the United

Malays National Organization (UMNO) in May 1946. The British eventually gave in

and replaced the plans with the Federation of Malaya scheme. In 1948, the MCP,

which demanded immediate independence, mounted an armed insurrection against the

British. Meanwhile, the Westernized local elites of different communities - Malays,

Chinese, and Indians - began to forge inter-communal compromises and form

political coalition to compete in local elections, while negotiating with the British for

independence. In August 1957, the multi-racial Federation of Malaya was granted

independence. In 1961, Prime Minister Tunku Abdul Rahman proposed the idea of

forming "Malaysia", which would consist of Malaya, Singapore, Sabah (North

Borneo), Sarawak, and Brunei. On September 16, 1963, despite strong opposition

from Jakarta (which accused the Malaysia project as a "neocolonialist" plot) and

Manila (which laid claim to Sabah), a larger Federation of Malaysia was formed

159
merging these British colonial possessions, except Brunei which opted to stay out of

the federation. Under Sukarno, Indonesia launched Konfrontasi (a low intensity

military campaign) to "crush" Malaysia, which lasted until the Gestapu coup and

Suharto's rise in 1965-1966. Earlier, in August 1965, Singapore was expelled from

the Federation of Malaysia, chiefly due to the irreconcilable political differences

between Lee Kuan Yew's People's Action Party (PAP) and the Tunku's UMNO-led

government in Kuala Lumpur. It was from that moment onwards that Malaysia and

Singapore embarked on their own state- and nation-building trajectories. As will be

made clear in the chapters that follow, these historical experiences and memories

would have implications not only for the bilateral relations between the two countries,

but also for their respective policies toward the neighboring states and the big powers.

o Ethnic Composition: Malaysia and Singapore are both multi-ethnic societies.

In Malaysia, the Malay Muslims form the majority group, making up nearly 60

percent of its 27 million people. Ethnic Chinese and Indians - who are mostly

descendants of migrant workers brought in by the British to develop Malaya's

plantation and mining industries in the nineteenth century - comprise about 26 and 8

percent, respectively. 50 In Singapore, 75 percent of its 4.8 millions citizens are ethnic

Chinese. Another 15 percent are Malays, 8 percent are Indians, and the remaining 2

percent are of Eurasian and other origins. The high concentration of ethnic Chinese

(as a percentage of the total population) in Singapore and Malaysia51 makes the two

countries' respective China policies not only a matter of bilateral relations, but an

issue that may bear important domestic and geopolitical considerations. I shall

50
The remainder is constituted by the indigenous people in Sabah and Sarawak and the Orang Asli in
the peninsula.

51
Singapore and Malaysia have the highest concentration of ethnic Chinese outside of mainland China,
Taiwan, Hong Kong, and Macau. Comparatively, ethnic Chinese as a percentage of the total population
is 10 percent in Thailand, 3 percent in Indonesia, and 2 percent in the Philippines.

160
elaborate on this in the subsequent chapters.

o Political Systems: The political systems in Malaysia and Singapore -

described variously as "soft authoritarianism", "quasi-democracy", "semi-

democracy", or "one-party dominant regime" 52 - exhibit the core characteristics of

what Fareed Zakaria has called "illiberal democracy." 53 While the ruling parties in

the two countries (the UMNO-led Barisan Nasional [BN] coalition in Malaysia and

the PAP in Singapore) are both democratically elected, their political systems are,

however, ones that are marked by a lack of free and fair multiparty elections, an

absence of the separation of powers, and a limitation of basic civil rights and

freedoms. These flaws have meant that the mere presence of democratic institutions

and electoral "competition" processes alone do not provide the ruling elites with

sufficient moral authority to rule, and that they have to resort to a variety of

legitimation paths (e.g. economic growth, goal-rational ideologies, popular

sovereignty) in order to justify and sustain their grip of power.54

o Economic Structure: Singapore and Malaysia are both small open economies

that are export-oriented, trade-dependent, and driven by foreign direct investment.

These features are both a blessing and a risk for the two countries. On the one hand,

the strategy of tapping foreign markets and foreign capital helps to compensate for

their inherent disadvantages in small domestic markets. On the other hand, however,

it also makes the states particularly vulnerable to unfavorable changes in the external

52
Gordon P. Means, "Soft Authoritarianism in Malaysia and Singapore," Journal of Democracy 7:4
(1996), pp. 103-17; Zakaria Haji Ahmad, "Malaysia: Quasi Democracy in a Divided Society," in Larry
Diamond, Juan J. Linz, and Seymour Martin Lipset, eds., Democracy in Developing Countries: Asia
(Boulder: Lynne Rienner, 1989), pp. 347-81; William Case, Politics in Southeast Asia: Democracy or
Less (Surrey, UK: Curzon Press, 2002); Diane K. Mauzy and R.S. Milne, Singapore Politics Under the
People's Action Party (London & New York: Routledge, 2002).

53
Fareed Zakaria, "The Rise of Illberal Democracy," Foreign Affairs 76:6 (Nov/Dec 1997), pp. 22-43.

54
Alagappa, Political Legitimacy in Southeast Asia; Case, Politics in Southeast Asia.

161
conditions. A downturn in the global economy - especially in their traditional markets

in developed countries - poses a risk to their economic well-being. The economic

recessions in 1985-1986 and the present time indicate that such risks are ever present

in both countries.

o Diplomatic and Strategic Assets: Malaysia and Singapore possess comparable

sets of diplomatic and strategic resources that can be mobilized to pursue their

respective "national" interests. Diplomatically, both countries are members of major

regional, inter-regional, and global institutions, such as ASEAN and the ASEAN-

driven forums (ARF, APT, and EAS), Asia-Pacific Economic Cooperation (APEC),

ASEM, as well as the UN and its affiliated agencies. Strategically, both countries

have maintained close military cooperation with the Western powers. These include

not only the Five Powers Defence Arrangements (FPDA), but also defense ties with

the U.S. These institutional memberships and military linkages constitute important

diplomatic and strategic assets for Malaysia and Singapore that enable them to

maximize their bargaining leverage vis-a-vis the external actors, making them the

"system-affecting" states or "middle powers" in Robert Keohane's term, as discussed

in p. 19 in Chapter 1.

Together, these shared characteristics make Malaysia and Singapore similarly-

situated states with comparable domestic and external variables, thereby making them

an ideal set to examine what accounts for the variations in states' alignment choices.

The common features ensure that the selected countries' policy choices is a not an

issue of feasibility, but a matter of desirability. For instance, given that military

cooperation with Western powers is a strategic asset accessible by both countries,

they could have opted for balancing if they wanted to. The manner and extent to

162
which the strategic asset is being employed, then, is entirely a question of desirability

and not possibility. By keeping the issue of feasibility constant, such a case selection

allows us to focus on the questions of "what is desirable" and "why it is desirable" -

e.g. which instrument of statecraft is the preferred choice for individual countries;

why country A appears to be more attracted by instrument X than country B is; and so

on.

Data Requirements and General Questions to be Asked of Each Case

In order to compare and analyze the data for each selected cases in a systematic

manner, the same questions will be asked of each case along three general clusters:

(a) The structural conditions - Who are the great powers of the day? How is

the pattern of the distribution of capabilities among the great powers in the region

under study (bipolar, unipolar, or multipolar)? Are the relative capabilities of the

neighboring giant(s) on the rise or decline? How are the levels of the individual

powers' commitment to regional affairs (increasing, decreasing, or constant)? What is

the pattern of relations among the powers (conflictual, competitive, detente, or

entente)? What are the primary goals of the individual powers' regional involvement

(economic interests, political influence, strategic maneuverability, ideological

expansion, and/or military domination)?

(b) The impact of the prevailing structural conditions on the ruling elites'

domestic legitimation efforts ~ Who forms the core of the country's leadership?

Which group(s) of socio-political elites do the governing elites associate with in

holding the state office and in carrying out the governing task? What sort of

normative or instrumental beliefs that sticks them together? What ideals do they

163
repeatedly resort to in their efforts to justify and consolidate their domestic

domination? What types of dangers do the elites perceive as "risks" to their power

base and authority justification? How are the risks ranked, represented, and

prioritized? How do the ruling elites mobilize the internal and external resources to

mitigate those risks? In what way have the prevailing structural conditions affected

the elites' efforts in this regard? In what way, and to what extent, has a giant

neighbor's growing (or declining) power brought about challenges and/or

opportunities to the elites' domestic legitimation efforts?

(c) The smaller state's policy responses - In light of the perceived impact of

the changing structural conditions, how has the smaller state responded to the growing

might of its neighboring giant (in this case, China)? Do the state seek to balance

against, countercheck, or ally with the neighboring giant? How are the "other powers"

and neighboring countries factored into the equation? What sorts of policy options

have the state adopted? What alternative paths are considered but not taken?

Specifically, in what way has the state opted to integrate alignment, institutionalized

cooperation, and internal efforts into its overall strategy vis-a-vis the giant? Are the

adopted strategies geared toward profit-maximizing, risk-contingency, or both? To

what extent are the strategies motivated by the elites' desire to cushion and offset the

adverse effects of possible ups and downs in the state's external conditions?

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 CHAPTER 5

MALAYSIA AND SINGAPORE'S ALIGNMENT CHOICES

IN THE SHADOW OF RED CHINA, 1945-1970

"How can we be neutral when we have suffered from Militant Communism during
the Emergency. ... As a small nation, we cannot afford to stand neutral. We must take
sides."
Tunku Abdul Rahman, Malaysian Prime Minister,
November 1967

"The long-term problem is to demonstrate to China that her interest is not served by
attempting to overthrow the existing order in South East Asia but rather to co-operate
with it, that the price of her non-cooperation and hostility is too high. However, we
can only demonstrate that if we show that we have the will and the capacity to resist
her encroachment and that we have sufficient allies of sufficient power to assist us in
such a struggle."
M. Ghazali Shafie, Permanent Secretary,
Malaysian Ministry of External Affairs, December 1968

"In a nutshell our problem is how to make sure that a small island with a teeming
population and no natural resources to speak of, can maintain, even increase, its
living standards and also enjoy peace and security in a region marked by mutual
jealousies, internal violence, economic disintegration and great power conflicts. The
first thing to remember is that Singapore, by itself, cannot do much to shape the
course of history in Southeast Asia. When tigers fight, the lamb is asking for trouble
if it joins the fight in the expectation that it can restore peace among the combatants.
If big countries in the region or outside the region are really determined to make
trouble or fight among themselves, there is little that Singapore, by itself, can do to
stop them. But this does not mean that Singapore should shut itself in and do nothing
to help bring about peace in the region. The wrong way for Singapore to help bring
peace is to join in any conflict by backing one side or the other. This is what we mean
when we say that we are non-aligned."
S Rajaratnam, Singapore's Foreign Minister,
July 1966

This and the next chapter seek to trace the origins and evolution of Malaysia and

Singapore's alignment choices during the Cold War period. To this end, the

discussion is divided into three distinct phases: (1) from independence to 1970; (2)

from 1971 to 1975; and (3) from 1976 to 1989. This chapter covers the first phase,

whereas Chapter 6 discusses developments in the latter two phases.

165
 Along the lines of the theoretical framework developed in the foregoing

chapters, I shall focus on the following aspects of each phase: (a) the structural

conditions faced by both countries; (b) the impact of the prevailing structural

conditions on the elite's domestic legitimation in the respective states; and (c) the

individual states' policy options and alignment choices toward the big powers,

particularly China. By "alignment choices", I mean the manner and extent to which a

state chooses to position itself vis-a-vis the major actors in the international system,

which may manifest in different forms and combinations of military alliances,

diplomatic rapprochements, political partnerships, as well as functional and economic

collaboration (see Chapter 3, pp. 93-98).

This and the next chapter, together, suggest that in part because of the Cold

War bipolarity and in part because of the governing elites' need to use external

assistance to cope with their pressing security, economic, and political risks at the

domestic front, Malaysia and Singapore had throughout the early years of their

independence opted to align with Western powers and made that alliance relations the

cornerstone of their external policies. These included a posture of non-recognition -

and, in the case of Malaysia, a policy of confrontation - to balance against the Red

China. It was not until the late 1960s when their patrons had signaled their intention

to reduce military presence in the region - along with domestic political concerns -

that the two smaller states began to adjust their alignment postures. This was

discernable not only in their new emphasis on forging institutionalized cooperation

with neighboring countries, but also in their pragmatic moves to develop closer

economic ties with the socialist world and to make political rapprochement with

Communist China, despite their lingering distrust toward the gigantic neighbor. These

adjustments, in retrospect, could be seen as the origins of the two smaller states'

hedging behavior. They marked the beginning of a new orientation in which the

166
smaller actors have ended the previous practice of completely allying with the West to

resist against China, and replaced it with a two-pronged policy of acknowledging -

albeit not necessarily accepting - China's interests while simultaneously maintaining

counteracting measures aimed at constraining the giant's hegemonic dispositions.

What explains the shift in the two smaller countries' policies? What drove

them to adopt the seemingly contradictory two-pronged approach toward the giant to

the north? I contend that the policy adjustments were driven by both structural and

domestic factors. At the system level, as a result of the reduced strategic role of the

Western powers following the British East of Suez pullout and the American retreat

from Indochina, the regional configuration of power had shifted in favor of the

communist powers. For the ruling elites in Kuala Lumpur and Singapore, this had

meant that they could no longer rely on Western powers as the linchpin of their

survival strategies in the way they did in the past, and that they were now left to deal

with the sources of external threats pretty much on their own. This structural pressure

- amplified by the elites' domestic needs to strengthen their nation-building efforts as

well as to boost economic growth by expanding export markets beyond the

traditional, developed economies - had compelled the two smaller states, along with

others in the region, to forge some forms of rapprochement with Communist China.

The necessity of establishing and keeping a working relationship with Beijing was

further reinforced by the developments in Indochina after 1975, as well as the

economic recession in the mid-1980s. In the eyes of the leaders in the two capitals,

both developments had an impact in underscoring the growing importance of China

for their own efforts to mitigate risks and to maintain their power base at home.

Despite the rapprochement, the leaders of the two countries were still deeply

suspicious of the neighboring giant's intentions, not least because of Beijing's

overseas Chinese policy and its continued support for the outlawed Malayan

167
Communist Party (MCP). The leaders thus judged that rapprochement without any

counteracting measure would be politically untenable and strategically risky.

Accordingly, both governments had opted to restrict people-to-people contacts with

China while maintaining military cooperation with their Western partners to safeguard

their security. Realizing that the neighboring colossus could hurt or help them more

than any other power in the long run, such a counteracting approach was regarded as

essential for their own survival. Nevertheless, the approach had remained more a

general tendency than a cohesive policy throughout the Cold War decades. This was

mainly because there were no regularized and institutionalized platforms that would

enable the smaller states to engage and bind the neighboring giant while getting the

involvement of other powers to serve as a countervailing political force. As shall be

made clear in Chapters 7 and 8, it was only in the early 1990s when the Cold War had

ended that the conditions became ripe for the creation of multilateral institutions,

which set the stage for a more full-grown hedging behavior on the part of the smaller

states toward the rising power.

From Independence to 1970:

Aligning with the West to Balance against Communist China

When the Federation of Malaya gained its independence from the British in August

1957, the world had entered into the second decade of the post-World War II period

that was shaped by the twin forces of decolonization and Cold War bipolarity. While

the former had resulted in the creation of many "new" states as independent sovereign

entities in the international arena, the latter had given rise to the emergence of two

opposing camps on the world stage, with the United States-led Western bloc on the

one side and the Soviet-dominated Communist camp on the other. In Asia, the

pressures of the Cold War were accentuated by the Communist victory in China. The

establishment of the People's Republic of China (PRC) in 1949 prompted the U.S. to

168
pursue a more active Asian policy in order to contain the spread of communism in the

region, particularly Southeast Asia where the new states were seen as vulnerable to

communist subversion because of their internal divisions, political underdevelopment,

and economic difficulties. 1 By the early 1950s, in the wake of the communist-led

uprisings all across the region, the U.S. had moved to conclude three alliance treaties

in Asia (a mutual defense arrangement with the Philippines, a tripartite treaty with

Australia and New Zealand, and a security pact with Japan), while providing aid to

Southeast Asian states with the hope of strengthening the latter's socioeconomic

structure and preventing them from falling into the Soviet camp.2

On the part of the PRC, the first decade of its existence witnessed Chairman

Mao's strategy of allying with the Soviets to counter the U.S.-led "imperialists."3 The

outbreak of the Korean War and the developments of the Indochina conflict then

cemented the regional balance of power between the U.S. on the one side and the

USSR and PRC on the other, which lasted for the next two decades.4 Significantly,

this period also saw China pursuing a policy of supporting indigenous communist
1
See Evelyn Colbert, Southeast Asia in International Politics, 1941-1956 (Ithaca: Cornell University
Press, 1977), pp. 140-1. The NSC 48/1: The Position of the U.S. with Respect to Asia (December 23,
1949) states that "the extension of communist authority in China represents a grievous political defeat
for us ... If Southeast Asia is also swept by communism, we shall have suffered a major political rout
the repercussions of which will be felt throughout the rest of the world, especially in the Middle East
and in a then critically exposed Australia. ... the colonial-nationalist conflict provides a fertile field for
subversive communist movements, and it is now clear that Southeast Asia is the target for a
coordinated offensive directed by the Kremlin." The Pentagon Papers (Gravel Ed.), Vol. 1, p. 87. On
the U.S. containment strategy, see John Lewis Gaddis, Strategies of Containment: A Critical Appraisal
of American National Security Policy during the Cold War, rev. and exp. ed. (Oxford: Oxford
University Press, 2005).

2
Underlying these moves were the belief that the triumph of communism in one country would have a
roll-on effect on its neighboring countries, leading them to fall one by one with incalculable losses to
the free world. This belief later became known as the "domino theory". See Russell H. Fifield,
Americans in Southeast Asia: The Roots of Commitment (New York: Crowell, 1973); Nicholas Tarling,
ed., The Cambridge History of Southeast Asia, Vol. 4 (Cambridge: Cambridge University Press,
1992/1999), pp. 150-3 & 268-75.

3
Chen Jian, Mao's China and the Cold War (Chapel Hill: University ofNorth Carolina Press, 2001).

4
Allen S. Whiting, China Crosses the Yalu: The Decisions to Enter the Korean War (New York:
Macmillan, 1960); Zhai Qiang, China and the Vietnam Wars, 1950-1975 (Chapel Hill: University of
North Carolina Press, 2000); George C. Herring, America's Longest War: The United States and
Vietnam, 1950-1975, 4th ed. (New York: McGraw-Hill, 2001); Michael Yahuda, The International
Politics of the Asia-Pacific, 1945-1995, 2nd ed. (London: Routledge, 2004), pp. 16-55.

169
insurgencies in Southeast Asia. 5 Mao's revolutionary foreign policy - in part

motivated by Cold War politics and in part by Mao's own aspiration to project his

rural-based revolution as the model for other national liberation struggles in Asia -

had the effect of not only reinforcing the perception of Communist China as a

subversive and threatening power in the minds of the Southeast Asian leaders, but

also driving the U.S. into deeper involvement in the region.6

It was against such a structural backdrop that Malaya - and then Singapore -

began their international life as new smaller states in a region that was then described

as the Balkans of Asia. By 1957, the Cold War bipolarity had already left its mark on

the region. The Philippines and Thailand had officially aligned with the U.S. by

joining the Southeast Asia Treaty Organization (SEATO), which was a key

instrument of U.S. containment policy in Asia. South Vietnam similarly came under

the influence of the U.S., whilst North Vietnam, who succeeded to power north of the

17th parallel of latitude under the 1954 Geneva Agreements, belonged to the

Communist camp. Cambodia and Laos were declared "neutral" by the same

agreements. Indonesia and Burma, on the other hand, chose to adopt a policy of "non-

alignment." Meanwhile, Singapore and Brunei were still under British rule. Singapore

became a self-governing state within the British Empire in 1959. It joined Malaya and

the former British territories of Sabah and Sarawak to form the Federation of

Malaysia in 1963. Singapore assumed its sovereignty as an independent republic only

in August 1965 when it exited from the federation.

5
Jay Taylor, China and Southeast Asia: Peking's Relations with Revolutionary Movements, exp. ed.
(New York: Praeger, 1976); Melvin Gurtov, China and Southeast Asia: The Politics of Survival
(Baltimore: The Johns Hopkins University Press, 1971/1975).

6
A. Doak Bamett, Communist China and Asia: Challenge to American Policy (New York: Council on
Foreign Relations, 1960), esp. pp. 147-210 & 291-336; C.P. FitzGerald, China and Southeast Asia
Since 1945 (Victoria: Longman Australia, 1973); Michael Leifer, The Foreign Relations of the New
States (Victoria: Longman Australia, 1974).

170
Ruling Elites and Their Representations of "National" Risks

In order to understand how the changing structural conditions (particularly those

stemmed from or related to China's changing levels of capability and patterns of

behavior) had an impact on Malaysia and Singapore's alignment choices at different

junctures, one must first comprehend how "national" risks were perceived, prioritized,

and represented by the ruling elites in the respective states at a given period. This in

turn requires us to understand the two countries' domestic socio-political settings,

which were by and large a legacy of the British colonial rule. Among the legacies are:

(a) a plural society;7 (b) an export-oriented economy that was well integrated into the

world economy; (c) a political system modeled on Westminster parliamentary

democracy, with a British-styled bureaucratic infrastructure and a Western legal

tradition; (d) the British-trained state elites, who were pro-West in their foreign policy

outlook; and (e) certain sections of the society who were extremely sensitive to issues

of sovereignty and foreign interference.8

These historical legacies and societal features set the parameters of the

political processes in the two countries.9 They form the social and institutional ground

for the manner in which political elites seek to acquire, justify, and enhance their

authority to rule.

In Malaya, the elites of the ruling Alliance Party - a communal party-based

7
A plural society is defined by J.S. Furnivall as one made up of different ethnic groups who mix but
not combine: "Each group holds by its own religion, its own culture and language, its own ideas and
ways. As individuals they meet, but only in the market place, in buying and selling. There is a plural
society, with different sections of the community living side-by-side, but separately within the same
political unit. Even in the economic sphere there is a division of labour along racial lines." See
Colonial Policy and Practice (Cambridge: Cambridge University Press, 1948), p. 304.

8
J.M. Gullick, Malaya (London: Ernest Benn, 1964); T.N. Harper, The End of Empire and the Making
of Malaya (Cambridge: Cambridge University Press, 2001); Barbara Watson Andaya and Leonard Y.
Andaya, A History of Malaysia, 2 nd ed. (Honolulu: University of Hawai'i Press, 2001); Edwin Lee,
Singapore: The Unexpected Nation (Singapore: ISEAS, 2008).

9
K.J. Ratnam, Communalism and the Political Process in Malaya (Singapore: University of Malaya
Press, 1965); Karl von Vorys, Democracy Without Consensus: Communalism and Political Stability in
Malaysia (Princeton: Princeton University Press, 1975); Garry Rodan, e d , Singapore (Aldershot:
Ashgate, 2001).

171
coalition between the United Malays National Organization (UMNO) and the

Malay(si)an Chinese Association (MCA), which was later joined by the Malay(si)an

Indian Congress (MIC) - came to acquire their governing mandate largely through the

platform of "consociational" bargaining that helped them to win successive elections

from 1952 to 1955.10 Led by Kedah prince Tunku Abdul Rahman Putra Al-Haj, the

Alliance's landslide electoral victories over other political parties of various shades

(first the multi-communal Independence of Malaya Party, and then the more pro-

Malay Party Negara and the religious-based Partai Islam) not only conferred the

Alliance elites with the legitimacy to negotiate with the British for independence, but

also demonstrated the acceptability of their consociational framework to govern the

multiethnic society after the departure of the colonial power.11 The fact that the

Alliance elites - who comprised mainly the Malay aristocracy, the predominantly

Malay state bureaucrats, and the English-educated non-Malays - did eventually

succeed in obtaining independence for Malaya in a peaceful and orderly manner

further enhanced the coalition's authority vis-a-vis other contending political actors,

particularly the largely Chinese-based Malayan Communist Party (MCP) who had

since 1948 sought to establish an independent republic via armed struggle.

In Singapore, the People's Action Party (PAP) also first came to power

through competitive electoral processes, albeit on an entirely different platform.

Starting out as a social-democratic, anti-colonial, and mass mobilizing party which

was led by a group of English-educated moderates headed by Lee Kuan Yew, the

10
Consociational bargaining refers to a form of inter-communal compromise and power-sharing
arrangement, which is often manifested in a grand coalition of elites from all ethnic groups. See Arend
Lijphart, Democracy in Plural Societies (New Haven, CT: Yale University Press, 1977); Donald L.
Horowitz, Ethnic Groups in Conflict, 2 nd ed. (Berkeley: University of California Press, 2000).

11
John Hilley suggests that there were economic, political, and strategic reasons why the British
colonial authorities had chosen to groom the Tunku-led Alliance as their successor: they "saw in the
Tunku a stable figure-head for the coalition, someone who would retain a laisser-faire approach to
foreign capital, favour British interests and, in the gathering Cold War climate, maintain opposition to
communism in the region." See Hilley, Malaysia: Mahathirism, Hegemony and the New Opposition
(London: Zed Books, 2001), p. 29.

172
PAP won a decisive victory in the 1959 election that was held concurrently with the

island's acquisition of self-governing status from the British. After the elections,

however, the very platform that brought Lee and his associates into power - i.e. their

united front with left-leaning unionists that was aimed at attracting Chinese-educated

masses and broadening the party's electoral base - had begun to work against them.12

During the turbulent years of 1961-1963 (discussed below), their authority was

increasingly challenged by the radical leftists, who were allegedly maintaining links

with the Beijing-oriented MCP in Malaya. 13 It was in this connection that the MCP

was viewed as the biggest common threat to the emerging elites in the two territories.

Like most communist parties elsewhere in Southeast Asia, the MCP was

founded in colonial times, supported by the Moscow-based Communist International,

and influenced by Communist China. 14 It was active in trade unions and local

organizations in Malaya and Singapore in the pre-war period. The party expanded

considerably during the Pacific War, when it mobilized and led the Malayan People's

Anti-Japanese Army (MPAJA) guerillas, which was trained and armed secretly by the

British, to resist the Japanese occupation. 15 After the return of the British in the post-

war period, the MCP pursued a policy of "peaceful struggle" - purportedly on the

12
Charles Morrison and Astri Suhrke, Strategies of Survival: The Foreign Policy Dilemmas of Smaller
Asian States (New York: St. Martin's Press, 1979), pp. 172-5; Carl A. Trocki, Singapore: Wealth,
Power and the Culture of Control (New York: Routledge, 2006), pp. 107-24. For the PAP elites' own
analyses of their path to power, see Lee Kuan Yew, The Singapore Story: Memoirs of Lee Kuan Yew
(Singapore: Times Editions, 1998); Chan Heng Chee and Obaid ul Haq, eds, S. Rajaratnam: The
Prophetic and the Political (Singapore: ISEAS & Graham Brash, 2007), pp. 16-44.

13
FitzGerald, China and Southeast Asia Since 1945, pp. 76-7; Taylor, China and Southeast Asia, pp.
282-3.

14
Beijing exerted a particularly strong influence over the communist movements in Malaya and
Singapore, in part because of its direct role in the founding of the local movements, and in part because
of the presence of sizeable ethnic Chinese in the two territories. The Communist Party of China was
instrumental in forming the South Seas (i.e. Southeast Asia) Committee in 1926. The Committee was
later transformed into the South Seas Communist Party, which, in turn, created the Malayan
Communist Party in April 1930 with revolutionary responsibilities for Malaya and Singapore. See
Barnett, Communist China and Asia, pp. 150-9; Taylor, China and Southeast Asia, pp. 251-2.

15
Cheah Boon Kheng, Red Star over Malaya: Resistance and Social Conflict during and after the
Japanese Occupation of Malaya, 1941-1946, 3 rd ed. (Singapore: NUS Press, 2003).

173
advice of Communist China - with an eye to attain self-government within a legal

framework. 16 However, largely because its members were predominantly ethnic

Chinese, the MCP had little appeal to Malays, who were concerned about the danger

of a Chinese takeover. Although the party succeeded in exploiting the economic

situation to stage several mass demonstrations and industrial strikes, its attempts to

forge a united front with left-wing Malays in opposition to the conservative UMNO

were to no avail. 17 The MCP was excluded, along with other left-to-centre parties,

from the constitutional negotiations among the British, the Malay Rulers, and UMNO

for a future Malayan Federation. 18 In early 1948, after the signing of the Federation of

Malaya Agreement and the tightening of government's control over trade unions, the

MCP under the new leadership of Chin Peng decided to shift its strategy by taking up

arms. 19 The British colonial authorities declared a state of "Emergency" in June, and

outlawed the party in July. The revolt coincided with other communist uprisings in

Burma, Indonesia and the Philippines.

By launching its insurrection to "liberate Malaya", the MCP projected itself as

a nationalist movement to fight for independence. 20 The colonial government reacted

by deploying the British and Commonwealth troops, as well as by mobilizing the

enlarged local police and armed forces against the guerrillas. On the political front,

the government sought to win the battle for the hearts and minds by taking a number

of major sociopolitical initiatives - most notably the promise of independence as well

16
Taylor, China and Southeast Asia, p. 256.

17
J.H. Brimmel, Communism in Southeast Asia (Oxford: Oxford University Press, 1959), p. 204;
Taylor, China and Southeast Asia, p. 257.

18
Khong Kim Hoong, "The Early Political Movements before Independence," in Zakaria Haji Ahmad,
ed., Government and Politics of Malaysia (Singapore: Oxford University Press, 1987), esp. pp. 16-19.

19
Anthony Short, The Communist Insurrection in Malaya, 1948-1960 (London: Frederick Muller,
1975). For Chin Peng's account of the MCP's decision to take up arms, see C.C. Chin and Karl Hack,
eds., Dialogues -with Chin Peng: New Light of the Malayan Communist Party (Singapore: Singapore
University Press, 2004), pp. 117-40.

20
Chin Peng, Alias Chin Peng: My Side of History (Singapore: Media Masters, 2003).
as the mass resettlement of Chinese squatters into New Villages - which prove to be

decisive in isolating the guerillas and neutralizing potential support for the MCP,

thereby turning the tide of the counter-insurgency warfare. 21 In 1955, the MCP

requested to hold talks with the Alliance leaders, who had just won the first federal

elections in July the same year. In the December meeting in Baling, which was also

attended by the chief minister of Singapore, the MCP offered to cease fighting if the

British agreed to transfer "complete" authority of internal security and self

determination to Malaya and Singapore. 22 The talks, however, eventually collapsed

after the Tunku rejected Chin Peng's demands that the MCP be recognized as a legal

party. 23 After Malaya's independence, the new government refused any

accommodation with the communists. The MCP then resumed its guerilla attacks, and

accused the Tunku's government as a "puppet of the British imperialists."

To the new governing elites in Malaya, the threats posed by the MCP

insurgency were not only security but also political in nature. In addition to contesting

the legitimacy of the Alliance government on self-determination and ideological

grounds, the ethnic Chinese dominated-insurgency also presented a problem to the

new government's nation-building efforts. As observed by Shafruddin Hashim,

although the insurgency was not supported by the majority of local Chinese who

made up between 40 and 50 percent of the newly independent Malaya, the fact that

21
As Tunku Abdul Rahman reflects in his 1986 book: "The people cannot give their hearts to a cause
of colonialism which they resent, so in order to win the hearts and minds of the people they must be
sure that the people get something in return; and that something is Independence." See Political
Awakening (Petaling Jaya: Pelanduk, 1986/1987), p. 64. See also Richard Stubbs, Hearts and Minds in
Guerilla Warfare: The Malayan Emergency, 1948-1960 (Singapore: Oxford University Press, 1989).

22
Cheah Boon Kheng, Malaysia: The Making of a Nation (Singapore: ISEAS, 2002); Tunku Abdul
Rahman, Political Awakening, pp. 63-7. See also Chin and Hack, Dialogues with Chin Peng, pp. 171-
85.

23
The Tunku dismissed the possibility of coexistence with the MCP on ideological grounds: "The
MCP's ideology is an ideology of violence and hatred while ours is one of peace and goodwill. Theirs
is a foreign movement directed from without and has very little support from within. On the other hand,
ours is a powerful Malayan nationalist movement backed by the people of the country. It is obvious
that their ideology and ours cannot exist side by side." See Tunku Abdul Rahman Putra Al-Haj,
Malaysia: The Road to Independence (Petaling Jaya: Pelanduk, 1984/2007), pp. 84-5.

175
the movement was overwhelmingly Chinese in membership and was encouraged by

Communist China had created the impression that there was "an apparent link

between communism, the PRC, and the local Chinese." Such impression had led

Malay leaders "to raise doubts about the Chinese' ultimate political loyalty" and

fuelled suggestions "that the Chinese could be fifth columnists in the PRC's strategy

of promoting world communist revolution." 24 That underlying perception was clearly

evident in the Tunku's remarks to parliament in 1958:

There is no such question whatsoever of our adopting a neutral policy while Malaya
is at war with the Communist. Only when we are certain that people here have
become truly Malayan-minded and have set their minds on making Malaya their only
home can the government declare our policy of neutrality. So long as this fight
continues, I consider that we would be breaking faith with the people if this
government were to enter into any form of diplomatic relationship with the
communist countries. ... let me tell you that there are no such things as local
communists. Communism is an international organization which aims for world
domination, not by aggression if they can avoid it, but by the use of tactics and
methods among the sons of the country to overthrow democracy and to set up in its
place a government after the pattern of all communist countries.2

That perception of the "Chinese problem", exacerbated by China's practice of

treating all "overseas Chinese" as Chinese citizens, had greatly complicated the

Malayan government's efforts to integrate and cultivate a shared socio-political bond

among the heterogeneous communities of the new nation.26

24
Shafruddin Hashim, "Malaysian Domestic Politics and Foreign Policy: The Impact of Ethnicity," in
Karl D. Jackson et al, e d s , ASEAN in Regional and Global Context (Berkeley: University of
California, 1986), esp. pp. 156-7. See also Noraini Haji Abdullah, "Leadership in Malaysia: Security
Perceptions and Policies," in Mohammed Ayoob and Chai-Anan Samudavanija, e d s . Leadership
Perceptions and National Security: The Southeast Asian Experience (Singapore, ISEAS, 1989), pp.
142-59.

25
Quoted in Shafruddin, "Malaysian Domestic Politics and Foreign Policy," p. 157.
26
The "Chinese problem" was not unique to Malaysia, but was also found in other Southeast Asian
countries where ethnic Chinese lived as minority communities. See Leo Suryadinata, e d . Ethnic
Relations and Nation-Building in Southeast Asia: The Case of the Ethnic Chinese (Singapore: ISEAS,
2004); Wang Gungwu, China and the Chinese Overseas (Singapore: Times Academic Press, 1991);
FitzGerald, China and Southeast Asia Since 1945, pp. 81-94. On China's changing "overseas Chinese"
policy, see Stephen Fitzgerald, China and the Overseas Chinese: A Study of Peking's Changing Policy,
1949-1970 (Cambridge: Cambridge University Press, 1972); Leo Suryadinata, Understanding the
Ethnic Chinese in Southeast Asia (Singapore: ISEAS, 2007), esp. "Chapter 5: China's Citizenship Law
and the Chinese in Southeast Asia."

176
 In view of Beijing's overseas Chinese policy and its role in supporting the

MCP to overthrow the Malayan government, it was little wonder that political elites in

Kuala Lumpur had come to perceive China as the greatest external enemy. Indeed, in

the eyes of the pro-West Alliance elites, Communist China was an expansionist power

who posed a threat not only to Malaya, but also to the Free World at large. Tun Ismail

Abdul Rahman, the minister of home affairs and the acting minister of foreign affairs,

described China as a giant outside power who was "bent on a long-range programme

of expanding its power and influence through its proxies in South East Asia."27

Accordingly, throughout the premiership of the Tunku, tiny Malaya had

unequivocally pursued an anti-communist and anti-China foreign policy.28 In 1957,

when Beijing offered to recognize the newly independent federation (as part of

China's policy of "peaceful coexistence" the Bandung Line), the Malayan

government had turned down the overture, out of a fear that a Chinese embassy in

Kuala Lumpur would become "the centre of communist propaganda and subversion

given the dubious loyalties of the local Chinese." 29 In 1958, the Tunku chose to make

his first overseas trip as premier to Saigon, which he viewed as a frontline state

against communist expansionism. The next few years saw Malaya providing arms and

training in counter-insurgency to South Vietnam, in a move to display its solidarity

with the latter.30 In March 1959, Malaya came out strongly to deplore China's

suppression of the Tibetan revolt. In October the same year, it co-sponsored with

27
Speech of Tun Ismail bin Dato Abdul Rahman, Minister of Home Affairs and Acting Minister of
Foreign Affairs, to the Foreign Correspondents Association, Johore Bahru, 23 June 1966. In R.K. Jain,
ed., China and Malaysia, 1949-1983 (New Delhi: Radiant, 1984), p. 91.

28
Marvin C. Ott, "Foreign Policy Formulation in Malaysia: The Tunku Era "Asian Survey 12:3
(March 1972), pp. 225-242.

29
Hari Singh, "Malaysia and the Communist World, 1968-81" (Ph.D. Dissertation, La Trobe
University, Australia, 1988), p. 68.

30
Abdullah Dahana, China dan Malaysia dalam Arena Perang Dingin 1949-74 [China and Malaysia
during the Cold War Era, 1949-74] (Bangi: Penerbit Universiti Kebangsaan Malaysia, 2002), p. 123.

177
Ireland a resolution tabled at the UN General Assembly, calling for "respect for the

fundamental human rights of the Tibetan people and for their distinctive cultural and

religious life." 31 In October 1962, when the India-China border war broke out, Malaya

was forthright in criticizing China's action. It even launched a "Save Democracy

Fund" to "help India defend itself against Chinese aggression."32 Domestically, the

Malayan government had taken actions to insulate the local Chinese community

"from the political and socio-cultural pulls reverberating from the home of Chinese

civilization." 33 Publications from China were banned; travel restrictions to and from

the mainland were imposed; and the Bank of China branches in Kuala Lumpur,

Penang, Ipoh, Seremban, and Batu Pahat were all ordered to close.

Meanwhile, the Malayan government continued to fight the MCP guerrillas.

By 1960, the federation forces had, with the assistance of Commonwealth troops,

succeeded in containing the threat of insurgents. In July, following the retreat of the

guerillas to the remote jungle areas along the Thai border, the government ended the

state of Emergency. The top security officers of the Tunku's government, however,

still perceived a threat from the MCP, believing that the danger now came more from

the communist subversive activities in urban areas than from jungle warfare. 34

Later, situations in Singapore and Indochina led the Tunku to become

increasingly concerned that communism was gaining ground in the region. In Laos,

the Vietminh-aided communist Pathet Lao forces were advancing toward Luang

Prabang by late April 1961. The development prompted the Malayan government to

31
Chandran Jeshurun, Malaysia: Fifty Years of Diplomacy, 1957-2007 (Kuala Lumpur: The Other
Press, 2007), p. 27; Jain, China and Malaysia, pp. 39-40.

32
J. Saravanamuttu, The Dilemma of Independence: Two Decades of Malaysia's Foreign Policy, 1957-
1977 (Penang: Penerbit Universiti Sains Malaysia, 1983), p. 27.
33
Hari Singh, "Malaysia's National Security: Rhetoric and Substance," Contemporary Southeast Asia
26:1 (2004), p. 5.

34
Ooi Kee Beng, The Reluctant Politician: Tun Dr Ismail and His Time (Singapore: Institute of
Southeast Asian Studies, 2006), p. 130.

178
worry that a communist-controlled Laos, "with the help of the Soviet Union and

Communist China, would render the Geneva Agreement useless."35 This could pose a

risk to Malaya from the north. To the south, the PAP, the ruling party in Singapore

who just came to power two years ago, had suffered defeat in a crucial by-election in

April 1961. The events ensued suggested that the moderates on the island might lose

its majority to the "pro-communist" left-wing groups in the coming general election.36

To the Alliance leaders in Kuala Lumpur, the prospect of a communist regime

in its southern tip was seen as a grave threat to Malaya's security and political

viability. Considering that Singapore's overwhelmingly Chinese population were

related to the local Chinese on the Malay Peninsula, the Tunku feared that if power in

Singapore were to fall into the hands of left-leaning and Chinese chauvinist elements

with strong links with Communist China, the island might become a "Cuba in his

Malayan backyard." 37 This would not only increase the risk of an externally-inspired

communist revolution that could be launched onto the peninsula from a close

distance, but also undermine the government's nation-building efforts. 38

In order to avert the looming dangers, the Malayan premier had come to

reassess his earlier position of rejecting the idea of merging Malaya with the

35
Ghazali Shafee, Ghazali Shafie's Memoir on the Formation of Malaysia (Bangi: Penerbit Universiti
Kebangsaan Malaysia, 1998/2004), p. 25.

36
A.J. Stockwell, ed., Malaysia: British Documents on the End of Empire, Series B Vol. 8 (London:
Institute of Commonwealth Studies, 2004), pp. 112-5; Leifer, The Foreign Relations of the New States,
p. 64.

37
Mohamed Noordin Sopiee, "The Advocacy of Malaysia - Before 1961," Modern Asian Studies 7:4
(1973), pp. 717-32.

38
In a paper he put forward to the British and the Tunku in early May 1961, Lee Kuan Yew warned
that the "effect of a pro-MCP and pro-China Government in Singapore on the Chinese in the
Federation will accentuate in the Federation the communal conflicts and dissolve the Chinese will to
resist 'Chinese' Communism. This will sooner or later end up in an independent Singapore. A
Singapore independent by itself must pander to its 75% Chinese population and will end up with
greater appeals to Chinese chauvinism and eventually all talk of Malayan culture, national language,
national solidarity and nation-building will disappear with tremendous adverse repercussions on the
Chinese in the Federation of Malaya. The consequences are incalculable and would certainly put an
end to any hope of building a united community composing of Malay, Chinese, Indian and other races
in Malaya." Stockwell, Malaysia, p. 110.

179
predominantly Chinese populated island of Singapore. The Tunku now judged that,

instead of excluding Singapore and facing the risks of a pro-Beijing regime at its

doorstep, it was in Malaya's interest to integrate the island into an enlarged

federation, so that his central government could control the radical left in Singapore

with the provisions of the Internal Security Act (ISA), which authorized the police to

detain individuals without trial. On May 27, 1961, the Tunku made his historic

proposal for the formation of Malaysia, which would merge the Federation of Malaya,

Singapore, and the three British colonial territories of North Borneo (Sabah),

Sarawak, and Brunei. 39 The Tunku's proposal was welcomed by Lee Kuan Yew, who

had long advocated the merger idea not only for the political motive of crushing his

leftist rivals, but also for the economic reasons of tapping into the Malayan hinterland

for resources and market that were deemed critical to Singapore's survival.40

The merger plan can thus be seen as a strategic choice that was borne out of

the convergence of interests between the ruling elites in both territories 41 It was a

state-building endeavor through which the two state elites sought to strengthen their

position by redrawing their political map and by strengthening their coercive capacity

to fight against a perceived common threat.

These interests notwithstanding, the merger plan nonetheless presented both

39
Tunku Abdul Rahman Putra Al-Haj, Looking Back: Monday Musings and Memories (Kuala Lumpur:
Pustaka Antara, 1977), pp.77-89. For differing interpretations of the origins of the "Malaysia" concept,
see Mohamed Noordin Sopiee, From Malayan Union to Singapore Separation: Political Unification in
the Malaysian Region 1945-1965, 2 nd ed (Kuala Lumpur: University of Malaya Press, 2005), esp.
Chapter 6; Ghazali, Memoir on the Formation of Malaysia; Tan Tai Yong, Creating "Greater
Malaysia ": Decolonization and the Politics of Merger (Singapore: ISEAS, 2008).

40
Diane K. Mauzy and R.S. Milne, Singapore Politics Under the People's Action Party (London:
Routledge, 2002), pp. 18-9.

41
The British, who had floated the idea of the "Grand Design" as early as 1887, were supportive of the
enlarged scheme as proposed by the Tunku. Given the anti-colonial climate at the time, London had
come to see the formation of a larger and more stable Federation of Malaysia as a favorable
arrangement that would maintain British commercial and strategic interests in the region, specifically:
to retain the continued use of the military bases in Singapore, to increase stability in Singapore, to
safeguard the future of the Borneo territories, and to deny Jakarta and Manila's territorial ambitions
over the British colonial territories. See Karl Hack, Defence and Decolonisation in Southeast Asia
(London: Routledge, 2001), pp. 274-5; Tan, Creating "Greater Malaysia", esp. Chapter 1.

180
internal and external challenges to the elites in Malaya and Singapore. To the Tunku

and his UMNO colleagues, bringing Singapore into the federation would upset the

racial and political balance in the new country, because the Chinese would then

outnumber the Malays. This would be politically unacceptable to the Malays. In order

to convince the skeptical UMNO members to approve Singapore's entry into the

proposed federation, the Tunku insisted on incorporating the three Borneo territories,

whose indigenous groups were regarded as "brothers" by the Malays in Malaya.42

This enlarged scheme was viewed by the Malay elites as necessary to restore the

ethnic balance in the greater federation. Ghazali Shafie, the then permanent secretary

of the Malayan ministry of external affairs who took part in the merger negotiations,

wrote in his memoir that it was "imperative that Malaysia had to have the Borneo

territories; a single merger with Singapore was a non-starter."43

In Singapore, Lee Kuan Yew and his PAP was confronted by fierce opposition

from leftists inside and outside the party, who sought to prevent the island city from

merging with Malaysia and demanded full self-government with autonomy of internal

security from the British. In July 1961, the PAP lost the Ansun by-election. This was

the second defeat for the party within a period of three months. A subsequent

showdown at the Legislative Assembly then led to the expulsion of the extreme left

from the party, who later formed the Barisan Sosialis (BS). Under the leadership of

Lim Chin Siong and Lee Siew Choh, the Barisan posed a serious political threat to the

PAP by employing "those very techniques which had brought the PAP to power -

42
Cheah, Malaysia, pp. 57-8. Saravanamuttu adds that besides the concern about politico-racial
balance, the Tunku's insistence on including the Borneo territories was also due to security
considerations: i.e. the need to grant the territories the status of self-government and independence, as a
way to thwart the communist attempt to capture these territories. See The Dilemma of Independence, p.
63 & p. 71.

43
Ghazali, Memoir on the Formation of Malaysia, p. 28. In the end, Brunei decided against joining the
Federation, in part because of the Sultan of Brunei's concern for his ranking in the election process of
the Yang Dipertuan Agung (Paramount Ruler of the Federation), and in part because of his concern
over the control of Brunei's oil revenue.

181
appeals to anti-colonial feeling, criticism of Britain, and a determination to dominate

the trade union movement." 44 The BS leaders attacked Lee's merger plan as "nothing

but a phoney merger", and warned that under the PAP's proposal the people of

Singapore "will only be reduced to the status of second-rate citizens."45

Lee Kuan Yew, having made a clean break with the leftist faction whom he

called "communists", 46 was now bent on launching the "Battle for Merger" to meet

head-on the challenges posed by his most formidable foe.47 In a series of radio talks,

Lee depicted his opponents as radical elements fighting for the "sectarian" interests,

while identified his PAP cabinet as the popularly-elected government who must act in

terms of the "national" interests for the racially diverse and non-communist people of

Singapore. 48 Lee further projected his proposed goal of "gaining independence

through merger" as a rational and inevitable solution for the political and economic

future of the island-city. By the time the referendum on merger was concluded in

September 1962, the move toward Malaysia had appeared unstoppable. Lee seemed to

have regained his political footing. But the decisive moment that ended the challenge

from his rivals came in February 1963, when the Internal Security Council

(comprising representatives of the British, Malayan and Singaporean governments)

ordered the Operation Cold Store to round up BS leaders and clamp down the pro-

44
Alex Josey, Lee Kuan Yew: The Crucial Years (Singapore: Times Book International, 1980), p. 147.

45
Quoted in Edwin Lee, Singapore, p. 190.
46
Lim Chin Siong and other leftist leaders denied they were proxies of the outlawed MCP. See Lysa
Hong and Huang Jianli, The Scripting of a National History: Singapore and Its Past (Hong Kong:
Hong Kong University Press, 2008); Sonny Yap, Richard Lim, and Weng Kam Leong, Men in White:
The Untold Story of Singapore's Ruling Political Party (Singapore: Singapore Press Holdings, 2009).

47
See Lee, The Singapore Story, pp. 385-401.
48
Beng-Huat Chua observes that, by making a distinction between the "popularly-elected PAP
government" and the "communists", Lee was able to claim political legitimacy for himself and the PAP
government, "in spite of the fact that both had come to power through the massive electoral
mobilisation by the left faction, which he was now casting as an anti-nationalist fringe. It was as
nationalists that the PAP spoke to the 'nation' and the 'people'." See Beng-Huat Chua, Communitarian
Ideology and Democracy in Singapore (London: Routledge, 1995), pp. 14-6.

182
communist trade unions in Singapore, just months before the formation of Malaysia

on September 16 that year. 49 In the Singapore general election that was held five days

later, the PAP won and returned to office. For the next two years, Lee and his

colleagues succeeded in capitalizing on their contention with Kuala Lumpur to rally

support and to demonstrate that only the PAP "had the ballast to tackle the Alliance

government." 50 Thereafter, as the BS drifted into political obscurity, the PAP elites

gradually assumed full control and have remained in power until the present day.

Externally, the idea and eventual creation of Malaysia was opposed strongly

by two neighboring countries. The Philippines revived its claim to North Borneo,

whereas Indonesia, then under President Sukarno, accused the Malaysia project as a

"neo-colonialist" and "neo-imperialist" plot designed to preserve the British economic

and military interests while suppressing genuine nationalistic movement in the

region. 51 On January 20, 1963, Indonesia announced a policy of "Konfrontasr

(Confrontation) against the proposed federation. After the formation of Malaysia,

Jakarta intensified its operation to "crush" the infant country. From 1963 to 1966,

armed incursions took place in northern Borneo and peninsular Malaysia; bomb

attacks occurred in Singapore; local fishermen were harassed in the Straits of Malacca

and Singapore; and infiltrations were attempted on different parts of the Malaysian

territory. In the event, Beijing gave support to Jakarta. This confirmed Malaysia's fear

that communists in China and Indonesia had forged a pact to establish hegemony over

the region. According to Ghazali Shafie, the Malaysian government tended to view

Konfrontasi "as a communist, PKI (Parti Komunis Indonesia)-inspired project

49
Mathew Jones, "Creating Malaysia: Singapore Security, the Borneo Territories and the Contours of
British Policy, 1961-1963," Journal of Imperial and Commonwealth History 28:2 (May 2000), pp. 85-
109.

50
Chan Heng Chee, Singapore: The Politics of Survival, 1965-1967 (Singapore: Oxford University
Press, 1971), p. 21.

51
Stanley Bedlington, Malaysia and Singapore: The Building of New States (Ithaca: Cornell University
Press, 1978), pp. 108-11; Ghazali, Memoir on the Formation of Malaysia, pp. 327-437.

183
pointing to a Jakarta-Peking-Hanoi-Pyongyang axis with Malaysia as the target of

China's expansionism." 52 This perception led Kuala Lumpur to harden its anti-China

line, and to regard Konjrontasi as a pressing external threat that had to be countered

against at both military and diplomatic fronts (discussed below).

Besides external threats, the ruling elites of the newly established federation

also had to deal with a range of internal problems. Chief among them were the

incompatible nation-building visions as conceived of and promoted by the elites in

Singapore and Kuala Lumpur. Lee Kuan Yew's PAP advocated the cause of a

"Malaysian Malaysia", in which all citizens would be equal, irrespective of ethnicity.

The Tunku-led UMNO, by contrast, chose to promote a "Malay Malaysia" that

privileges the interests of the majority Malay-Muslim. This fundamental discord,

coupled with the leaders' differences over party and political issues as well as

economic and financial arrangements, had contributed to the federal-state tensions

and racial strain that characterized the two-year period when Singapore was part of

Malaysia. 53 The Tunku and his associates attacked Lee for questioning Malay rights,

while the PAP blamed UMNO "ultras" for inciting anti-government sentiment among

the Malay community in Singapore, which culminated in the racial riots that broke out

on the island in July and September 1964.54 The increasing tension and irreconcilable

differences between the two sides eventually led to the expulsion of Singapore from

the federation in August 1965. Looking back, while the creation of Malaysia was a

product of convergence in the two elites' calculations to use the merger as a state-

building effort to enhance their governing capacity, the separation was, to a large

extent, the result of their divergence about how best to pursue nation-building in the

52
Ghazali, "Neutralisation in Southeast Asia"

53
Michael Leifer, "Singapore in Malaysia: The Politics of Federation," Journal of Southeast Asian
History 6:2 (September 1965), pp. 55-6; Albert Lau, A Moment of Anguish: Singapore in Malaysia and
the Politics of Disengagement (Singapore: Times Academic Press, 1998).
54
Ibid.; Noordin, From Malayan Union to Singapore Separation; Tan, Creating "Greater Malaysia".
fledgling, multiethnic country.

It must be noted that political and security problems as discussed above were

not the only risks facing the Malaysian and Singaporean leaderships during their

formative years. Economic difficulties - either in their own right or in conjunction

with political and security issues - were another source of strain that posed a threat to

the elites of the two countries. As mentioned, Malaysia and Singapore are both small

economies with tiny domestic market and a limited (in Singapore's case, zero) range

of resource endowment. Malaysia inherited from the British an export-oriented

commodity-based economy in which rubber and tin accounted for about two thirds of

its total export earnings, government revenue, and employment share. Such a heavy

dependence on the two commodities had left the state highly vulnerable to external

economic conditions, such as a fall in demand or a drop in the prices of the

commodities. In the case of Singapore, its economy was overshadowed by the

declining entrepot trade in the 1950s. Although the PAP leaders had attempted to

alleviate this by launching industrialization program with an eye to establish a

common market with the Malayan hinterland, this goal was never achieved following

Singapore's exit from the federation. To make matters worse, the island's economy

was hard hit by Indonesia's trade embargo during Konfrontasi. As a consequence of

losing access to its traditional sources of materials and markets, Singapore was faced

with huge economic difficulties at the time it attained statehood.

In Singapore and Malaysia, as elsewhere, economic problems have tended to

generate considerable political and security pressures on the ruling elites. This is

mainly because unemployment and economic hardship are likely to undermine the

support for the incumbent government, create mobilization opportunities for

contending elite, and heighten the disparity between economic classes and ethnic

groups. These, in turn, might precipitate social tension and political instability. Chan

185
Heng Chee notes that the past racial troubles in Singapore were mostly "instigated by

economic grievances."55 Richard Stubbs similarly observes: "The main incidents of

political instability and communal violence in Malaysia have taken place against a

backdrop of low commodity prices. The MCP took advantage of the depressed

economy of the late 1940s caused by low rubber and tin prices to gain support for

their guerrilla campaign; and in the mid-1970s low prices allowed the Communists to

mount a minor resurgence in guerrilla activity."56

Explaining the Key Policy Choices: Structural and Domestic Factors

The above discussion has suggested that throughout the early years of their

independence, Malaysia and Singapore were both confronted with a range of

interrelated internal and external problems. Most of these problems - particularly the

political and security threats facing the ruling elites - were associated with and linked

to China in one way or another. This section analyzes the structural and domestic

factors that explain the key policy choices of the two states in the light of the

problems. It first focuses on the states' dependence on Western alliances, before

explaining how this policy had been gradually complemented by an emphasis on

institutionalized cooperation toward the late 1960s.

Reliance on the Western Alliance to Counter against Communist China

One of the key common features of Malaysia and Singapore's external policies during

their formative years, as discussed above, was the two smaller states' close alliance

with the Western powers, which they used as a means to defend themselves from the

communist threats. Malaya entered into the Anglo-Malayan Defence Agreement

55
Chan, Singapore, p. 18.

56
Richard Stubbs, "The Foreign Policy of Malaysia," in David Wurfel and Bruce Burton, e d s . The
Political Economy of Foreign Policy in Southeast Asia (New York: St. Martin, 1990), p. 115.

186
(AMDA) upon its independence in 1957. The terms of the alliance were later

extended to all the territories of the enlarged Federation of Malaysia, including

Singapore. The pact obliged Britain to defend Malay(si)a from external aggression; in

return, the Malay(si)an government allowed its former colonial ruler to maintain

military forces in its territories. These included a multi-service Commonwealth

Strategic Reserve that consisted of British, Australian, and New Zealand troops.57

Along with the British base in Singapore, the Commonwealth strategic presence in the

peninsula was intended primarily to deter potential invasion from China into

Southeast Asia, thereby preserving stability and providing security to the emerging

nations. 58 The arrangement, which provided the anchor to Malaysian and Singaporean

defence policies, was to last until 1971, when AMDA was replaced by a loose

consultative framework of the Five Power Defence Arrangements (FPDA).59

What explains the two smaller states' alignment behavior during this period? I

argue that while Malaysia and Singapore's alliance choices were attributable to the

Cold War bipolarity where inter-state relations were organized largely along the East-

West ideological division, such structural forces only conditioned the overall strategic

orientation of the smaller states; in and by themselves they did not determine the

substance of their alignment choices. For instance, structural bipolarity does not

explain why Malaysia had entered into AMDA but refused to join the U.S.-led

SEATO; and it does not explain why - despite their common distrust of Beijing -

Malaysia had adopted an outright anti-China policy while Singapore a more subtle

posture. For reasons to be explained below, I believe the two states' choices were

57
Chin Kin Wah, The Defence of Malaysia and Singapore (Cambridge: Cambridge University Press,
1983). See also Hiroyuki Umetsu, "The Origins of the British Commonwealth Strategic Reserve: The
UK Proposal to Revitalise ANZAM and the increased Australian Defence Commitment to Malaya,"
Australian Journal of Politics and History 50:4 (December 2004), pp. 509-25.

58
Hack, Defence and Decolonisation in Southeast Asia.

59
Chin Kin Wah, The Five Power Defence Arrangements and AMDA: Some Observations on the
Nature of an Evolving Partnership, ISEAS Occasional Paper No. 23 (Singapore: ISEAS, 1974).
rooted in domestic politics - i.e. the policy considerations and trade-offs involved in

the respective governing elites' efforts to preserve their own authority to rule.

Specifically, Malaysia and Singapore had both opted to ally with and rely on

Western forces for external security mainly because the benefits of the alliance far

outweighed its costs in the eyes of the ruling elites. This was particularly true before

1966, when the two territories were still faced by an imminent security threat.

In terms of security, entering into a military alliance with Britain was seen by

the respective elites as an essential step to ensure their survival during the formative

period. In October 1957, the Tunku explained to the Parliament his government's

rationale for joining AMDA: "We do not possess a single aeroplane, nor a single

warship or even a single sailor, much less an air force. ... It would be unfair to send

our troops inadequately armed to wage war with Communist China whose armies are

fully equipped with every weapon of modern warfare ... That is the reason why we

are entering into this Agreement with the British Government - in order to safeguard

our security." 60 As mentioned, the British and Commonwealth forces not only

protected Malaya from the MCP threat from 1948 to 1960, but they also played a

crucial role in defending Malaysia and Singapore from Indonesia's Konfrontasi

(1963-1966). Both states also benefited, albeit indirectly, from the existence of the

U.S.-centered security systems such as SEATO and the U.S.-Japan pact, which served

to contain communist expansion in the region.

Economically, thanks to the security umbrella of the West, the Alliance Party

and the PAP governments were able to devote greater resources to domestic

construction. Tun Abdul Razak, the Malaysian Deputy Prime Minister, said in 1969:

"By obtaining military assistance and co-operation from our friends and neighbors we

can minimize the tendency of security needs to draw off resources needed for

60
Malayan Hansard, October 3, 1957, cols. 3360-1.

188
development." 61 Lee Kuan Yew wrote in his memoirs that the British presence in

Singapore "gave people a sense of security, without which we would not get

investments and be able to export our goods and services."62 In a more direct way,

Singapore and Malaysia also received other economic benefits from their Western

patrons. These included the access to export markets in the developed world, the

inflow of much-needed capital investment, as well as the provision of technical

assistance and developmental aid that were critical to the economic development of

the new countries. In the case of Singapore, its economy also benefited greatly from

the British military base, which created significant employment opportunities and

generated 20 percent of the island's gross domestic product (GDP).

Despite these security and economic payoffs, the policy of siding with the

West was not without political costs. Externally, the policy had provoked antagonism

from Indonesia, 63 and incensed the communist powers of Vietnam, China, and

Soviet.64 Domestically, it had invited attacks from various quarters. In Singapore, the

government's dependence on the British protection was criticized by the Barisan

Sosialis and other left-wing groups. In Malay(si)a, the government's policy drew

criticisms not only from opposition parliamentarians, but also nationalist elements

within UMNO who argued that AMDA had compromised Malaya's sovereignty and

independence. 65 Mahathir Mohamad, then an outspoken UMNO backbencher,

remarked: "In the negotiations for Merdeka [independence] ... [the Tunku] agreed to
61
J. Victor Morais, Strategy for Action: The Selected Speeches of Tun Haji Abdul Razak bin Dato'
Hussein Al-Haj (Kuala Lumpur: Prime Minister's Department, 1969), p. 10.

62
Lee Kuan Yew, From Third World to First: Memoirs of Lee Kuan Yew (Singapore: Times Editions,
2000), p. 47.

63
Joseph Chinyong Liow, The Politics of Indonesia-Malaysia Relations: One Kin, Two Nations (New
York: RoutledgeCurzon, 2005), pp. 79-106.
64
Hari, Malaysia and the Communist World.

55
Chandran Jeshurun, Malaysian Defence Policy: A Study in Parliamentary Attitudes, 1963-1973
(Kuala Lumpur: Penerbit Universiti Malaya, 1980), esp. pp. 110-33; Saravanamuttu, The Dilemma of
Independence, p. 23.

189
a defense treaty with Britain which gave Britain extra-territorial rights and an

influence over Malaya's foreign policy that was decisive. ... He also personally made

a gift of 'Carcosa,', the former official residence of the Colonial Secretary to the

British. ... The Union Jack flying over it appeared to be a symbol of continued British

domination of Malaya." 66 Given this kind of domestic opposition and pressures from

the left and the conservative Malay nationalists alike, it was thus not surprising that

the Malayan government had chosen not to join SEATO.

Malaya's non-participation in SEATO might also have been contributed by

other factors. That is, the leaders might have felt that: (a) it was strategically

unnecessary to join SEATO, because AMDA was deemed sufficient for the country's

security, and because Malaya's alignment with the ANZUK powers already

constituted an indirect link with SEATO; 67 (b) it was strategically risky to forge a

direct link with SEATO, because membership in the U.S.-led alliance would increase

the risks of dragging Malaya into the superpower conflict;68 and (c) it was

diplomatically and politically unappealing, because joining SEATO might alienate

some Asian states with whom Malaya sought friendly relations, and might suggest "to

its sizeable Chinese community that the country was to become involved in an anti-

Chinese combination." 69

Why did Malaysia take a more hard-line approach than Singapore toward the

People's Republic of China throughout this period? The reasons again were rooted in

domestic politics. Specifically, they had to do with the different extent and nature of

the "China threat" as perceived by the ruling elite in the two countries. In Malaysia,

66
Quoted in Morrison and Suhrke, Strategies of Survival, pp. 152-3.

67
Saravanamuttu, The Dilemma of Independence, p. 24; Morrison and Suhrke, Strategies of Survival,
p. 152.
68
Ibid.; Hari, "Malaysia's National Security," p. 4.

69
Leifer, The Foreign Relations of the New States, p. 47.

190
chiefly as a reaction to China's role in supporting the MCP as well as its perceived

links with the local Chinese, the Alliance elite saw Beijing not only as a major

security threat, but also a principal source of political problems that destabilized

internal order and undermined their nation-building efforts. In a speech in Kuala

Lumpur in 1966, Ghazali Shaffie remarked: "You may well ask what Communist

China's expansionism has to do with nation-building. My answer is this: it has

everything to do with nation-building, national construction. Its policies and actions

are aimed at interfering with the programme of nation-building in South East Asia."70

Elsewhere, he said that China "is the bird of prey which feeds on the frustrated hopes

and ideals of nationalism. The methods are well-known: they include hostile

propaganda, subversion, infiltration and organizational assistance, and the adroit

manipulation of every possible issue to create confusion and disunity, and to distract

our attention from productive pursuits to sterile undertakings."71 To cope with these

perceived political and ideological threats, the Malaysian government thus pursued a

rigidly anti-China policy, which included, inter alia, a number of measures aimed at

isolating its people from the mainland. The fact that China was still economically

largely inconsequential to the country made such a policy acceptable at this juncture.

In Singapore, the situation was somewhat different. While the ruling PAP elite

were similarly concerned about the political ramifications of China's actions (in

helping the insurgencies in Southeast Asia) and mere existence (China was a source

of ethnic and cultural attraction to some local Chinese), they nonetheless did not view

Beijing as a prime security threat. As noted by Chan Heng Chee: "Singapore's

apprehensions of the intentions of Communist China are secondary. The fact that she

has Vietnam and Thailand as buffer states may have contributed to her complacency.

70
M. Ghazali Shafie, Malaysia: International Relations (Kuala Lumpur: Creative Enterprise, 1982), p.
84.
71
Ibid., p. 135.
Her leaders are convinced that the communist threat will not be posed in military

terms unless the buffers go. The PAP leaders are sufficiently sophisticated to separate

the threat of communism from the threat of China. Her foreign minister S. Rajaratnam

has consistently emphasized in various versions one theme - that 'Communism

simply does not win unless there are grave social problems, regardless of China.'" 72

Singapore's concerns about China, then, were mainly political in nature. Internally,

the leaders of the city-state "had to contend with the dual pulls of ideology and

ethnicity that China exercised on the Chinese majority in Singapore, where the PAP

was pledged to the principle of multiracialism and not nationalism predicated on

Chinese supremacy." 73 Externally, the leaders had to work to dispel the image that

Singapore was a "Third China", for fear that such an image would invite unnecessary

suspicions from its close neighbors. 74

Significantly, these dual political "pushes" were counteracted to some degree

by economic "pulls": i.e. a pragmatic need to make economic gains from China

wherever possible. As observed by Leifer, "Entrepot trade with China was a tangible

asset for the Republic which it could not afford to discard."75 This was particularly

true after the island-state experienced had little access to its traditional markets

following its exit from Malaysia. The independent Singapore tolerated the opening of

Chinese emporia, which sold cheap products that helped to keep the cost of living

down. 76 It also permitted the Bank of China branch in Singapore to continue its

72
Chan, Singapore, p. 13.

73
Asad-ul Iqbal Latif, Between Rising Powers: China, Singapore and India (Singapore: ISEAS, 2007),
pp. 47-8.
74
Lee Lai-to, China's Changing Attitude towards Singapore, 1965-1975, Occasional Paper Series No.
22 (Singapore: Department of Political Science, University of Singapore, November 1975).

75
Michael Leifer, Singapore's Foreign Policy: Coping with Vulnerability (London: Routledge, 2000),
pp. 110-1.

76
Ibid.

192
business, but with the condition that no one from Beijing was allowed to direct the

bank, and that it must be staffed by Singapore citizens who received security

clearance. 77 The Bank, which was then the only branch left in Southeast Asia, served

to facilitate the growing trade between Singapore and China. In the absence of official

links between the two countries, the Bank also functioned as the point of unofficial

diplomatic contact with Beijing. 78

In view of the need to balance these political pushes and economic pulls, it

was thus logical for the PAP government to avoid an outright confrontational posture

toward China in the way Kuala Lumpur did. Accordingly, Lee and his colleagues had

repeatedly proclaimed that Singapore pursued a "non-communist" rather than an

"anti-communist" policy, while simultaneously taking steps to insulate its people

from undue influences of Communist China. In addition, the government had also

publicly pledged a policy of non-alignment, while continuing to identify with and rely

on the West in strategic terms.

A Growing Emphasis on Institutionalized Cooperation

Malaysia and Singapore's earlier policy of relying on the Western alliance, as noted,

was gradually supplemented by a burgeoning involvement in institutionalized

cooperation (on "institutionalized cooperation" as a smaller-state policy option, see

Chapter 2, pp. 51-76). At first, the two states had concentrated mainly on the United

Nations (UN), its specialized agencies, and the Commonwealth. From around the

mid-1960s, the duo had begun to broaden and deepen their institutional participation

not only by forging links with the Afro-Asian bloc, but also by developing

institutional ties with the neighboring countries. To be sure, Malay(si)a's involvement

in regional cooperation was not new, and can be traced to as early as in February

77
Lee, China's Changing Attitude towards Singapore.

78
Ibid.; Leifer, Singapore's Foreign Policy.
1961, when it joined with the Philippines and Thailand to form the Association of

Southeast Asia (ASA). The association, however, never really took off. It collapsed in

a mere two years as a casualty of the dispute over Manila's claim to Sabah. The same

fate beset Maphilindo (for MAlaya-PHILippines-INDOnesia) that was founded in

August 1963, when Kuala Lumpur broke off diplomatic relations with the two

countries after the advent of Malaysia in the following month.79 It was not until the

regional states had sought reconciliation in the Konfrontasi aftermath that led to the

birth of the Association of Southeast Asian Nations (ASEAN) on August 8, 1967

(discussed below). 80

What explains Malaysia and Singapore's growing emphasis on

institutionalized cooperation after the mid-1960s? Again, the explanation lies in both

the structural and domestic factors.

At the structural level, following a series of events in the period 1965-67, the

regional distribution of power seemed to be heading in a state of uncertainty. In early

1965, the U.S. began to escalate the war against Hanoi, crossing the threshold from

limited to massive military intervention in Vietnam. By 1967, however, it appeared

that the U.S. was far from winning the war. At around the same time, the frenzied

Cultural Revolution broke out in China. Sino-Soviet relations, which had been marred

by mutual distrust and hostility since the late 1950s, further deteriorated during this

period of tumultuous change. In June 1967, China exploded its first hydrogen bomb,

after it had first tested the atomic bomb three years earlier. For the ruling elite in

Southeast Asia, these developments not only increased the dangers from the

79
Bernard K. Gordon, The Dimensions of Conflict in Southeast Asia (Englewood Cliffs, NJ: Prentice-
Hall, 1966), pp. 1-41 & p p . 68-119.

80
On the formation and evolution of ASEAN, see Micheal Leifer ASEAN and the Security of Southeast
Asia (London: Routledge, 1989); Amitav Acharya, The Quest for Identity: International Relations of
Southeast Asia (Oxford: Oxford University Press, 2000); Donald E. Weatherbee, International
Relations in Southeast Asia: The Struggle for Autonomy, 2 nd edition (Lanham, MD: Rowman &
Littlefield, 2009); Alice D. Ba, (Re)Negotiating East and Southeast Asian: Region, Regionalism, and
the Association of Southeast Asian Nations (Stanford: Stanford University Press, 2009).

194
intensified great power rivalries, but they also heightened their perception of the

Chinese threat.81

In Malaysia and Singapore, what concerned the state elite most was the British

announcement in July 1967 to withdraw forces east of Suez, particularly from their

bases in Malaysia and Singapore by the mid-70s. 82 In January 1968, due to mounting

financial pressures, the Wilson government announced its decision to accelerate the

timetable for withdrawal by March 1971. These announcements caused particular

anxiety in Singapore. In his memoirs, Lee Kuan Yew recounted his worries about the

security and economic consequences of the British withdrawal: "This sudden turn of

events added to the pressure on us. Our economic problems would mount, as would

unemployment. Our defence problems had widened with the need for an air force.

How were we to build up an air force from scratch and have a squadron of fighter

aircraft operational by the end of 1971?"83 Realizing that Singapore could no longer

rely on Britain for its security, the PAP leaders moved to increase defense spending,

to expand full-time conscription, and to develop all three branches of Singapore's

armed forces with a clear focus on external defense. 84

85

By comparison, Malaysia's response was more ambivalent. On the one hand,

in part due to the improved security situation following the end of Konfrontasi, and in

part due to the Alliance leadership's growing unhappiness with British partiality

toward Lee Kuan Yew as tensions mounted between Kuala Lumpur and Singapore
81
Michael Antolik, ASEAN and the Diplomacy of Accommodation (London: M.E.Sharpe, 1990), p. 16.
Michael Yahuda, The International Politics of the Asia-Pacific, 1945-1995 (London: Routledge, 1996),
pp. 57-76.

82
David Hawkins, The Defence of Malaysia and Singapore: From AMDA to ANZUK (London: The
Royal United Services Institute, 1972).

83
Lee, From Third World to First, p. 61.

84
Tim Huxley, Defending the Lion City: The Armed Forces of Singapore (NSW, Australia: Allen &
Unwin, 2000), esp. pp. 6-23.

85
Morrison and Suhrke, Strategies of Survival, pp. 152-3.
during the period 1964-65, Malaysia was already determined to reduce its dependence

on the AMDA even well before the British "East of Suez" announcement. On the

other hand, however, the Alliance leaders had remained apprehensive of Malaysia's

external security, and felt the need for retaining British presence. Although the leaders

appeared to be convinced of the good intensions of General Suharto who rose to

power in Indonesia following the Gestapu coup of September 1965, they were

worried about a revival of "Sukarnoism" and Indonesian expansionism.86

Consequently, the Malaysian leaders had turned to promoting reconciliation with

immediate neighbors so as to ameliorate the country's security in the post-Konfrontasi

era.87 This objective coincided with the goal of their counterparts in Jakarta, Bangkok,

and Manila, who also saw regional tranquility as a prerequisite for their own nation-

building and economic development programs that were deemed essential for

preserving their power. To a large extent, the regional rapprochement was made

possible by the rise of Suharto. Upon assuming full powers from Sukarno in March

1966, the leader of the "New Order" regime gave nod to Indonesian-Malaysian

rapprochement to end Konfrontasi. This paved the way for the normalization talks in

Bangkok in April and May 1966, which, in turn, gave rise to the idea of creating a

new regional grouping. 88 The three foreign ministers who attended the talks - Adam

Malik of Indonesia, Tun Abdul Razak of Malaysia, and Thanat Khoman of Thailand

(the host and mediator) - agreed that a wider structure of regional cooperation was

necessary in order to prevent the recurrence of a Konfrontasi-Wke situation not only

between the two countries, but also the region as a whole. Together with the

86
Ibid, p. 154.

87
Antolik, ASEAN and the Diplomacy ofAccommodation, pp. 18-22; Liow, The Politics of Indonesia-
Malaysia Relations, pp. 107-15.

88
Dewi Fortuna Anwar, Indonesia in ASEAN: Foreign Policy and Regionalism (New York: St
Martin's, 1994); Ghazali Shafie, Malaysia, ASEAN, and the New World Order (Bangi: Penerbit
Universiti Kebangsaan Malaysia, 2000), pp. 149-87.

196
Philippines and Singapore, these states gathered to form ASEAN in August 1967.

Singapore viewed the formation of ASEAN with mixed feelings. On the one

hand, the opportunity of membership allowed Singapore to normalize relations with

neighboring countries previously at conflict and to manage bilateral tensions within a

wider multilateral context "which might also compensate economically for the loss of

a hinterland." 89 On the other hand, however, Singapore had some misgivings about

the regional organization "because of a suspicion that ASEAN was intended to serve

as a vehicle for Indonesia's regional ambitions, possibly in collusion with

Malaysia." 90

It must be noted that while the above-mentioned structural factors did induce

Malaysia and Singapore to place more emphasis on institutionalized cooperation (as

opposed to their previous dependence on alliance), they did not by themselves

determine the patterns of the states' diplomatic moves and institutional involvement.

For instance, the changing distribution of power among the major actors did not by

itself determine with whom Malaysia and Singapore chose to forge (or avoid)

institutionalized cooperation; and what forms of cooperation (including patterns of

relations with particular major actors) to be initiated and promoted. An analysis based

on the Trinity Framework leads us to argue that it was the state elites' shifting

domestic concerns - specifically, their prevailing need to prioritize and strike a

balance between preserving security, pursuing development, and promoting

autonomy - that contributed to the evolving patterns of the two states' institutional

involvements and alignment behavior during this period.

Malaysia's attention to the UN and affiliated agencies since the early days of

89
Chan Heng Chee, "Singapore: Domestic Structure and Foreign Policy," in Robert Scalapino, Jusof
Wanandi, and Sung-Joo Han, eds., Regional Dynamics: Security, Political, and Economic Issues in the
Asia-Pacific Region (Jakarta: Centre for Strategic and International Studies, 1990); Leifer, ASEAN and
the Security of Southeast Asia, pp. 18-9.

90
Leifer, ASEAN and the Security of Southeast Asia, pp. 18-9.

197
its statehood, for instance, was politically and economically essential for a newly-

independent smaller state who sought to gain recognition and acquire developmental

assistance from the international community. 91 Its active involvement in inter-

governmental regimes - most notably the International Rubber Study Group and the

International Tin Agreements - was also economically vital, because it was through

these platforms that Malaysia strived to stabilize the prices of the two primary

commodities that were then the lifeline of its economy.92 Similarly, Malaysia's keen

participation in the Commonwealth during the first decade of its independence was

strategically fitting and economically important, given that Britain and its

Commonwealth allies was still the primary patron of Malaysia, providing it with

security protection and absorbing a large part of its exports. Forging diplomatic and

institutional ties with socialist states was then considered economically less

compelling and politically unjustifiable, especially when the country was still

struggling to combat the communist threat. While Malaysia's reliance on the Western

powers had inevitably eroded its independence and invited domestic opposition as

noted above, these political costs were viewed by the elites as an acceptable tradeoff,

not least because of the threats of MCP insurgency and Indonesian Konfrontasi. The

same trinity calculus held true for the newly-independent Singapore.

The end of Konfrontasi substantially reduced the security pressures faced by

Malaysia and Singapore, thereby shifting the gravity of the elites' attention to the

issues of autonomy and economic development. Indeed, it was the growing

importance of these concerns that principally accounted for why the Malaysian and

Singaporean elite had launched a diplomatic offensive to woo Afro-Asian countries

91
Tawfik Ismail and Ooi Kee Beng, Malaya's First Year at the United Nations: As Reflected in Dr
Ismail's Reports Home to Tunku Abdul Rahman (Singapore: ISEAS, 2009).

92
Saravanamuttu, The Dilemma of Independence, pp. 30-5.

198
and to diversify their diplomatic links with different parts of the world since around

the mid-1960s.

Efforts to reach out to the Afro-Asian bloc began in 1964 (while Singapore

was still a part of the federation), as a move to defend Malaysia's position and to

counter Jakarta's propaganda in the Malaysian-Indonesian confrontation. Lee Kuan

Yew led a mission to 17 countries in early 1964, whilst Tun Abdul Razak

spearheaded visits to key states in Africa and the Middle East in 1964-1965.93

Significantly, it was during their interactions with leaders of the Third World

countries that the Malaysian elites began to realize that their hard-line anti-communist

and staunchly pro-West stance would not help to advance their goal of winning

friends in the international community. 94 This realization, coupled with the growing

domestic political pressures from the opposition and a counter-force within the

Alliance Party, had compelled the leaders to reassess Malaysia's foreign policy.95

This reassessment would eventually pave the way to a gradual shift in Malaysia's

alignment behavior from a pro-West and anti-China stance into one of "peaceful co-

existence" with all the big powers in the 1970s, as I shall elaborate in the next chapter.

It should be noted that Malaysia and Singapore's growing stress on

institutionalized cooperation during this period was not only driven by the elites'

political and strategic considerations. Economic imperative also played an important

part. In Malaysia, the sharp fluctuations in the prices of primary commodities in the

1960s had adversely affected the country's economic performance. This, together

with the leaders' anxiety over the unavoidable depletion of tin deposits and the long

term decline of natural rubber prices due to advances in synthetic rubber technology,

93
Chandran, Fifty Years of Diplomacy, pp. 74-83.

94
Saravanamuttu, The Dilemma of Independence, p. 89.
95
Ibid., pp. 71-6 & pp. 87-91; Chandran, Fifty Years of Diplomacy, pp. 80-3.

199
had forced the government to embark on economic diversification and

industrialization.96 Oil palm production was encouraged, export-oriented

industrialization was promoted, and the effort to explore new export markets was

intensified. 97 It was against this backdrop that Malaysia began to establish diplomatic

and commercial relations with the Soviets and Eastern European countries since 1967.

In Singapore, its secession from Malaysia in 1965 ended the PAP elite's hope

for a common market. Having lost its traditional hinterland that absorbed almost half

of its total exports and a third of its total imports, Singapore was compelled to search

for new overseas markets for its manufactured goods. Lee Kuan Yew recalls in his

memoirs: "Unless we could find and attach ourselves to a new hinterland, the future

was bleak." 98 Driven by a strategy of export-oriented industrialization and a desire to

reduce its trade dependency on Malaysia, the PAP government now began to look to

the U.S., Europe, and Japan as important sources of foreign investment, technology,

and managerial skills, as well as the key destinations for its export. This not only

constituted Singapore's early effort to diversify its economic base, but also served to

deepen its already strong pro-West orientation. Obaid ul Haq, however, rightly notes

that Singapore's preference for the Western economic system "should not be

interpreted as complete identification with and unqualified support for Western

powers and their policies." 99 Indeed, despite its pro-West outlook, Singapore was

clearly determined to trade with any country irrespective of differences of ideology or

96
Edmund Terence Gomez and Jomo K . S , Malaysia's Political Economy: Politics, Patronage and
Profits (Cambridge: Cambridge University Press, 1999), p. 16.

97
Ibid.; Jomo K . S , e d , Malaysian Industrial Policy (Singapore: NUS Press, 2007), pp. 6-9.

98
Lee, From Third World to First, p. 66.

99
Obaid ul Haq, "Foreign Policy," in Jon S.T. Quah, Chan Heng Chee, and Seah Chee Meow,
Government and Politics of Singapore, revised edition (Singapore: Oxford University Press, 1987), p.
283.

200
political system. 100 Such economic pragmatism has endured until the present day.

In both cases, the new strategies had not only broadened and diversified the

two countries' commercial and diplomatic links, but they also laid the groundwork for

the transformation of their economic structure in the decades to come.

Partly due to the economic imperative and partly due to a growing desire to

emphasize autonomy and self-reliance following the improvement in its external

security after the Malaysian-Indonesian rapprochement, the Malaysian elites

gradually moved away from their earlier policy of relying on the West. As observed

by Morrison and Suhrke, the net reduction in external threat "permitted Malaysia to

assume a relatively calm attitude toward the reduction in Britain's military presence,

in contrast to Singapore's alarmist attitude in 1968, and to take up almost eagerly the

task of redirecting its foreign and defence policies".101 An early sign of this policy

redirection can be noticed in a 1966 speech given by Tun Dr. Ismail Abdul Rahman in

his capacity as the acting foreign minister:

With the present Indonesian Government firmly embarked on a programme of

peaceful development and peaceful relations with her neighbours, the stage is now set
for the formation of a South-east Asian Association, a Community of South-east
Asian States ... Such a community would not be a military alliance. It would not be
an anti-communist alliance. Nor, for that matter, would it be an anti-westem alliance.
It would stand for something rather than against something. It would have to be a
body imbued with positive, lasting ideals. I myself envisage an organization which
would be, first and last, pro-South-east Asia, pro-development, pro-regional co-
operation and pro-peace. I do not believe that military blocs and alliances, by
themselves, can provide a lasting solution to the problem of communist
expansionism. ... We look forward to a regional association embracing Burma,
Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam.
We look forward to the day when outside powers, both great and small, will accept
our right as a region, and as constituent nations of this region, to sustain our
distinctive ways of life in freedom and prosperity, without interference.102

This policy reorientation was subsequently further developed and articulated

100
Ibid.; Linda Y.C. Lim, "The Foreign Policy of Singapore," in David Wurfel and Bruce Burton, eds.,
The Political Economy of Foreign Policy in Southeast Asia (New York: St. Martin's, 1990), esp. pp.
140-3.

101
Morrison and Suhrke, Strategies of Survival, p. 143.

102
J. Victor Morais, Selected Speeches: A Golden Treasury of Asian Thought and Wisdom (Kuala
Lumpur: Rajiv Printers, 1967), pp. 106-8.

201
in January 1968, when Ismail presented his idea of "regional neutralization" for the

first time. In his seminal "Ismail Peace Plan", he called for "the neutralization of

Southeast Asia guaranteed by the big powers"; signing of "non-aggression treaties"

and declaring "a policy of co-existence":

The time is ... ripe for the countries in the region to declare collectively the
neutralization of Southeast Asia. To be effective, this must be guaranteed by the big
powers, including Communist China. Second, it is time that the countries in Southeast
Asia signed non-aggression treaties with one another. Now is also the time for the
countries in Southeast Asia to declare a policy of co-existence in the sense that the
countries ... should not interfere in the internal affairs of each other and to accept
whatever form of government a country chooses to elect or adopt ... The alternative
to the neutralization of Southeast Asia guaranteed by the big powers ... is an open
invitation by the region to the current big powers to make it a pawn in big power
politics. The alternative to the signing of non-aggression treaties among the countries
in the region is an arms race among themselves which would be detrimental to their
economy. The alternative to the declaration of the policy of co-existence is increased
tension and subversion in the region.103

In retrospect, the ideas enunciated by Ismail not only set the tone for the shift

in Malaysia's alignment behavior in the early 1970s (discussed in the next chapter),104

but they also provided the basic framework for Malaysia and ASEAN's future policy

of a Zone of Peace, Freedom and Neutrality (ZOPFAN) in Southeast Asia.105 At the

domestic front, while Ismail's ideas were supported by Deputy Premier Razak and

senior officials in the foreign ministry, they received only lukewarm response from

the Tunku, who remained stanchly anti-communist and pro-Western. As will be

discussed, the neutralization proposal did not take off until Razak emerged as the de

facto head of government in the wake of the racial riots of May 1969 and the

subsequent imposition of national emergency. Razak assumed control of the country

first as the head of the National Operations Council (NOC) which ran the government

103
Saravanamuttu, The Dilemma of Independence, pp. 74-5.

104
Tun Ismail was credited with engineering the "palpable shift of Malaysian foreign policy towards
non-alignment." See Johan Saravanamuttu, "Tun Ismail: Early Architect of Malaysian Foreign Policy,"
The Journal of Diplomacy and Foreign Relations 9:1 (2007), pp. 7-16.

105
Ibid, p. 14; Heiner Hanggi, ASEAN and the ZOPFAN Concept, Pacific Strategic Papers No. 4
(Singapore: ISEAS, 1991), esp. pp. 12-20.

202
when parliamentary rule was suspended from May 1969 to January 1971, and then as

the Prime Minister from September 1970 onwards.

In the next chapter, I will examine the various structural and domestic factors that had

contributed to the shift in Malaysia and Singapore's alignment behavior in the early

1970s. In particular, I will explain why Malaysia actively pushed for the idea of

regional neutralization whereas Singapore (and other ASEAN members) had held

reservations about the proposal, and why Malaysia had made a policy shift by

recognizing China whereas Singapore had refrained from doing so, despite a common

desire to reconcile with Beijing. It is important to compare the two countries'

competing stance on these issues, because the differences not only reflected the two

smaller states' differing attitudes towards the reality of great-power politics in the

region, but they also revealed the underlying factors that had contributed to the two

countries' eventual policy choices toward China amid a fluid and uncertain power

structure. Some of these factors have continued to affect the two states' China

policies well into the post-Cold War era, as shall be made clear in Chapters 7 and 8.

203
 CHAPTER 6

MALAYSIA AND SINGAPORE'S ALIGNMENT CHOICES

IN THE FACE OF CHANGING REGIONAL REALITIES,
1971-1989

"The countries of South-East Asia are (China's) immediate neighbours and are the
first to live with the consequences of her policies. (Insofar) as Malaysia is concerned
... there is a constant barrage of radio broadcasts from China called 'Suara Revolusi
Malaya' ... which contains not merely virulent propaganda attacks ... but also
detailed instructions on (subversive) lines of action ... (The) countries of South-East
Asia are after all, independent countries who form a part of the existing order and
who cannot accept overthrow. The question therefore is this: Is there room for
adjustment and accommodation ... compatible with the legitimate national interests
of all countries concerned? Surely there must be. Malaysia ... accepts the fact that
China has a right to play her part in the international forums and to have interest in
the affairs of Asia ... But we cannot accept or tolerate any form of interference in our
internal affairs ... (We) await to see China's response, whether she for her part
recognizes and respects our independence and integrity and our legitimate interests in
South-East Asia."
Tun Abdul Razak bin Hussein, Malaysian Prime Minister,
January 1971

"In the search for an enduring and stable political regime in the region, China's role
would undoubtedly be crucial. You are no doubt aware that while many countries in
the region, including my own, are sympathetic of your modernisation efforts, there is
a feeling of uncertainty with regard to how China would impact upon the region
politically and militarily. Many wonder how, and in what ways, China will exercise
its political and military potency. Your neighbours, the smaller states in the region
particularly, worry how this would impinge upon their territorial integrity and
sovereignty. To be frank, some of us wonder whether China will seek to enhance its
political influence at our expense. In a comparative sense, we are defenceless and we
have no desire to seek recourse to massive defence build-ups or alliances both of
which are anathema to our way of life. If these concerns appear baseless to you, I ask
you to remember that historically small countries on the peripheries of a big and
powerful state have always had reason to be wary."
Dato Seri Dr. Mahathir Mohamad, Malaysian Prime Minister,
November 1985

"... the Third World countries cannot afford, in a world of Great Powers and weak
nations, to abandon the idea of non-alignment. Even if the existing Non-Alignment
Movement were dismantled, the Third World nations would be compelled, sooner or
later, to reconstruct a similar organisation because the alternative is to be forever
satellites of Great Powers."
S Rajaratnam, Singapore's Foreign Minister,
September 1973

"The more China embraced us as 'kinsman country' the greater would be our
neighbours' suspicions. It was difficult because Singapore's neighbours had
significant Chinese minorities who played a disproportionate role in the economy and
their economic success had aroused the jealousy and resentment of the indigenous

204
 peoples. Where they were of different religions, there was little intermarriage as with
the Muslims in Malaysia and Indonesia. This was a never-ending problem that China
had to take into account. It was an important underlying factor in the relationship
between China and the other countries in Southeast Asia."
Lee Kuan Yew, Singapore's Prime Minister,
Remarks Made to China's Leaders during His First Visit to the PRC, May
1976

Following up on the discussion in the previous chapter, this chapter traces the origins

of Malaysia and Singapore's alignment choices in the later part of the Cold War era. It

first focuses on the period 1971-1975, and then moves on to discuss the key

developments from 1976 to 1989. Specifically, it analyzes how the changing

distribution of power and geopolitical conditions during these two periods - in

conjunction with and reinforced by the developments on the domestic front - had

compelled the ruling elites of the two smaller states to make major adjustments in

their alignment choices vis-a-vis China and other big powers. These adjustments, as

we shall see throughout the remaining chapters of this dissertation, had brought some

profound ramifications for these countries' foreign policy orientations that have

persisted until the present day.

1971-75:

Rapprochement with China in the Face of Reduced Western Commitment

This period was characterized by three major features: (a) a reduced strategic presence

of the Western powers in the region following the British withdrawal from the east of

Suez and the American disengagement from Indochina; (b) the growing salience of

China as a third factor in the regional configurations of power in the wake of the

growing Sino-Soviet split, U.S.-China detente, and the PRC's admission to the UN;

and (c) the regional states' moves to reconcile with Beijing. As will be discussed

below, while the third was largely a function of the first two variables, it was

domestic factors that determined the extent and manner in which Malaysia and

205
Singapore (and for that matter, other smaller states in the region) had sought

rapprochement with their giant neighbor.

In 1971, the British began the withdrawal of forces from its bases in Singapore

and Malaysia. The Anglo-Malayan Defence Agreement (AMDA) was replaced by the

Five Power Defence Arrangements (FPDA) between Britain, Australia, New Zealand,

Malaysia, and Singapore. The FPDA obligated all partner states to "consult" each

other in the event of external aggression against Malaysia and Singapore; there was,

however, no obligation for the partners to act.1 At around the same time, the U.S. also

started to reduce its ground troops in mainland Southeast Asia as enunciated by

President Nixon's Guam Doctrine in July 1969.

These two events were watershed moments for Malaysia and Singapore's

defense planners. They effectively deprived the two smaller states of the security

umbrella of their patrons, and convinced the leaders that they could no longer find

security in the protective arms of their Western allies as in the past. This realization

compelled them to stress more on self-reliance and regionalism in their security

planning. 2

These developments took place amid the new importance of China as a

separate centre of power in the course of growing Sino-Soviet rift and Sino-American

' Under the FPDA, a permanent Integrated Air Defence System (IADS) was set up in 1971, with
headquarters at the Royal Malaysian Air Force (RMAF) Butterworth (located in the Malaysian state of
Penang). The IADS, which is staffed by personnel from each of the five partners, functions as the
standing operational arm of the FPDA. Each year, it organizes several joint air exercises involving
Malaysian and Singaporean forces as well as annual air and naval maneuvers involving some or all of
the five partners. See Yap Pak Choy, Air Power Development: The Royal Malaysian Air Force
Experience (Fairbairn, Australia and Bangi, Malaysia: Air Power Studies Centre and Universiti
Kebangsaan Malaysia, 1997); Tim Huxley, Defending the Lion City: The Armed Forces of Singapore
(Crows Nest NSW: Allen & Unwin, 2000), p. 38.

2
Muthiah Alagappa, "Malaysia: From the Commonwealth Umbrella to Self-reliance," in Chin Kin
Wah, ed., Defence Spending in Southeast Asia (Singapore: ISEAS, 1987), pp. 165-93; Lau Teik Soon,
"ASEAN and the Future of Regionalism," in Lau Teik Soon, ed., New Directions in the International
Relations of Southeast Asia: The Great Powers and South East Asia (Singapore: Singapore University
Press, 1973), pp. 165-85.

206
rapprochement. 3 In March 1969, the deepening Sino-Soviet tensions culminated in a

border conflict over Zhenbao (Damansky) island. In June the same year, Brezhnev

floated a proposal for an Asian collective security system. The proposal - coupled

with the first appearance of a Soviet naval flotilla in the Straits of Malacca in March

1968 - was widely viewed by leaders in the region as a sign of Moscow's growing

interest in expanding its presence from the Indian Ocean to Southeast Asia, in filling

in the power vacuum, and in rallying regional support to encircle China.4 It was

against this backdrop that China's wish to break its diplomatic isolation and to use its

improved relationship with the U.S. for counter-checking the Soviet threat coincided

with Washington's desire to get China's support for a negotiated settlement in

Vietnam and to exploit the Sino-Soviet rift for shoring up the American strategic

position globally and in Asia. 5 This convergence eventually led to the growing

rapprochement between the U.S. and China in the early 1970s. Once a target of U.S.

containment policy, Beijing now became a strategic partner with Washington.

Nixon's announcement in February 1972 that he would visit China sent shockwaves

around the world. The U.S.' allies and friends in the region were alarmed by the

prospect of abandonment by their superpower patron, whereas the Soviets became

concerned about the risk of encirclement by Washington and Beijing. These formed

the structural basis for the Soviet-U.S. detente and the establishment of diplomatic

relations between several developed countries and Beijing in the subsequent years.

3
Michael Yahuda, The International Politics of the Asia-Pacific, 1945-1995 (London and New York:
Routeldge, 1996), pp. 77-104.

4
Lau Teik Soon, Singapore, ASEAN and Regional Security, Occasional Paper Series No. 16
(Singapore: Department of Political Science, University of Singapore, 1975), p. 13; Hari Singh,
"Malaysia and the Communist World, 1968-81 " (Ph.D. Dissertation, La Trobe University, Australia,
1988).
5
David Shambaugh, "Patterns of Interaction in Sino-American Relations," in Thomas W. Robinson
and David Shambaugh, e d s , Chinese Foreign Policy: Theory and Practice (Oxford: Clarendon, 1994),
pp. 197-223; Harold P. Ford, "Calling the Sino-Soviet Split," Studies in Intelligence (Winter 1998-
1999), pp. 57-71.

207
The net effect was the acceleration of the transition from bipolarity towards a

"strategic triangle" between the U.S., the Soviet Union, and the PRC.6

In Southeast Asia, the ramifications of these structural changes were

particularly pronounced and far-reaching. The U.S. plan to pursue a negotiated

settlement and reduce its role in Indochina, in particular, was viewed by many as a

turning point in highlighting the limits of American power.7 In the eyes of the smaller

states in the region, the fact that their superpower patron was retreating from

Indochina while moving toward a rapprochement with their principal foe plainly

revealed the uncertain nature of great powers' intentions and actions. It suggested to

the smaller actors that the U.S. was now "slowly changing the nature and the basis of

her commitment to Southeast Asia", from one of containing communism to that of

safeguarding its own strategic interests by cultivating a favorable distribution of

o

power in the region. In adjusting to such new realities that "the British lion no longer

had any teeth, the Australian umbrella was leaking, and the American eagle was

winging its way out of Asia" 9 , the smaller countries like Malaysia realized that they

now had to "prepare themselves to face the consequences of firstly, a disengaged U.S.

in the region and secondly, a communist victory in Vietname, which was bound to

have major implications for regional security."10

This called for major adjustments in the smaller states' external policies.

Different states, however, chose to make different adjustments, mainly due to the
6
Ilpyong J. Kim, ed., The Strategic Triangle (New York: Paragon House, 1987).

7
Yahuda, The International Politics of the Asia-Pacific, 1945-1995, p. 88; Robert J. McMahon, The
Limits of Empire: The United States and Southeast Asia since World War II (New York: Columbia
University Press, 1999).

8
Zain Azraai, "Neutralization and Southeast Asia," in Lau, New Directions in the International
Relations of Southeast Asia, p. 131.

9
Noordin Sopiee, "Towards a 'Neutral' Southeast Asia," in Hedley Bull, ed., Asia and the Western
Pacific: Towards a New International Order (Sydney: Nelson, 1975), pp. 132-58.

10
Abdul Razak Baginda, "Malaysian Perceptions of China: From Hostility to Cordiality," in Herbert
Yee and Ian Storey, eds., The China Threat: Perceptions, Myths and Reality (London:
RoutledgeCurzon, 2002), p. 234.

208
vagaries of their own domestic politics as well as their differing expectations and

preference for the role of great powers in regional affairs.

Malaysia: A Shift to Regional Neutralization and Rapprochement with China

In Malaysia, the changing structural conditions had compelled the ruling Alliance

elites - now under the leadership of Tun Abdul Razak - to abandon the country's

long-standing pro-West stance, and to replace it with a posture of non-alignment and

regional neutralization (that was first enunciated by Tun Dr Ismail in 1968). This shift

of policy was formalized in April 1970 when Ghazali Shafle, the foreign ministry's

permanent secretary called for the endorsement of the neutralization "not only of

Indo-China area but of the entire region of South East Asia, guaranteed by the three

major powers, the People's Republic of China, the Soviet Union and the United

States, against any form of external interference, threat or pressure."11 This call was

reiterated in September by Tun Razak on the eve of his assumption of premiership,

when he presented the idea of "neutralization of Southeast Asia" as a key element of

Malaysian foreign policy at the Non-Aligned Summit Conference in Lusaka.

One might wonder: why the Razak government had opted for the idea of

"regional neutralization", and not other arrangements like a regional collective

security pact. A 1972 speech made by Zain Azraai, the then principal private secretary

to Tun Razak, offers an explanation as to why Malaysian policy elites had cast doubts

on the effectiveness and suitability of other alternative arrangements:

Various suggestions for a new framework have been made from time to time. These
range from the creation of a balance of power, with or without American support, to
11
Ghazali Shafie, Statement to the Preparatory Non-Aligned Conference at Dar-es-Salam on 15 April
1970; later published in Ghazali, Malaysia: International Relations, p. 157. Elsewhere, Ghazali makes
a distinction between "neutralization" and "neutrality". Neutrality refers to "a declaration of non-
involvement by a state" and "pertains to the rules a neutral country should follow in time of war";
whereas neutralization refers to "the act which brings about a state of neutralism, and neutralism refers
to the foreign policy of a state, either alone or in concert with other states, in times of peace."
Specifically, neutralism is "a policy of non-alignment with the two power blocs in the Cold War." See
his "Neutralisation of Southeast Asia," Pacific Community (October 1971).

209
 the strengthening of internal order, the pursuit of a more adroit diplomacy, and the
development of greater military self-reliance. A balance of power with American off-
shore air power, which is what the Nixon Doctrine may eventually evolve into, is
unlikely to be effective in assisting the countries to defend their territorial integrity
because air power cannot stop or prevent subversion much less ensure victory, as the
war in Vietnam illustrates. A purely Asian balance of power, if meant to counter-
balance the emerging power of China or other major powers, is unlikely to prove
credible, even if it could be constituted. An Asian collective security pact has also
been mooted. Although there is no certainty about the details, it is surely not likely to
succeed if the intention is to contain or check the legitimate interests of any one of the
big powers in Southeast Asia. Finally, the strengthening of internal order, the pursuit
of a more adroit diplomacy, or the development of greater military self-reliance
cannot be regarded as alternatives because they are in any event essential and indeed
they are necessary concomitants of neutralization.12

For the policy elites in Kuala Lumpur, the idea of regional neutralization provided a

more viable strategic option to safeguard the interests of smaller states like Malaysia

in a fluid external environment. Through the three provisions of the idea - signing

nonaggression treaty among the Southeast Asian states, declaring a policy of

coexistence, and obtaining a guarantee of Southeast Asian neutralization by the three

big powers (i.e. the U.S., the USSR, and China) - regional neutralization was viewed

as an optimal approach to protect Malaysia's territorial integrity and sovereignty amid

an uncertain future. 13 Specifically, while the first two provisions were aimed at

promoting regional cooperation and freezing the status quo within Southeast Asia, the

third element was hoped to reduce the risks of interference by external powers.14 The

Malaysian elites reckoned that, in the light of an uncertain power structure and an

increased communist influence, the bottom line strategies for smaller states would be

to influence the big powers "to re-define their role" and to set up "clear ground rules"

for inter-great power interactions, as a way "to insulate the countries of Southeast

Asia from being a theatre in which the big powers manoeuvre for a preponderance of

12
Zain, "Neutralization and Southeast Asia," p. 134.
13
Ghazali, "Neutralisation of Southeast Asia".

14
Morrison and Suhrke, Strategies of Survival, p. 156; Murugesu Pathmanathan, Conflict Management
in Southeast Asia: A Neutralized Malaysia? Occasional Papers on Malaysian Socio-Economic Affairs
No. 7 (Kuala Lumpur: Faculty of Economics and Administration, University of Malaya, 1977).

210
interest and influence", and thus to insure a degree of peace and stability in the

region. 15 In their view, in order to get the great powers to "recognize, undertake, and

guarantee Southeast Asia as an area of neutrality", the smaller states in the region

should acknowledge and accommodate each of the big powers' "legitimate interests",

while observing a policy of "equidistance" with all the powers.16 Malaysia's stance

was strategically logical. As observed by Morrison and Suhrke, neutralization

"provided a framework within which Malaysia could orient its relations with the great

powers on the basis of evenhandedness. Unlike most other Southeast Asian countries,
in
Malaysia had no close ties to any of the great powers."

This new framework necessitated Malaysia to adjust its China policy because
18

neutralization "required formal relations between the neutralized and the guarantor."

Tun Ismail - now the Deputy Prime Minister of the Razak government - said it

plainly: "We cannot ask Communist China to guarantee the neutrality of Southeast

Asia and at the same time say we do not approve of her."19 That China had now

shown a more sober and moderate external posture - as indicated by Beijing's move

to send its ambassadors who were recalled at the beginning of the Cultural Revolution

back to their posts, as well as its consent to reconvene the Warsaw talks with the U.S.

- made it easier for Malaysia to explore reconciliation with the giant neighbor.

The first clear sign of Kuala Lumpur's changing policy towards Beijing was

discernable on January 1971, when Razak openly expressed Malaysia's desire for a

rapprochement with the PRC, and urged the latter for a response to his overtures:

"Malaysia ... accepts the fact that China has a right to play her part in the
15
Zain, "Neutralization and Southeast Asia," pp. 129-36.

16
Ghazali, "Neutralisation of Southeast Asia".

17
Morrison and Suhrke, Strategies of Survival, p. 159.

18
Noordin, "Towards a 'Neutral' Southeast Asia."

19
Quoted in Morrison and Suhrke, Strategies of Survival, p. 160.

211
international forums and to have interest in the affairs of Asia ... But we cannot

accept or tolerate any form of interference in our internal affairs ... (We) await to see

China's response, whether she for her part recognizes and respects our independence

and integrity and our legitimate interests in South-East Asia."20 Four months later, in

part because of the goal of creating direct trading relations with China, and in part

because of the need to establish some form of communication line with the Chinese

side in the absence of official links, an officially-sanctioned trade mission was

dispatched to Beijing. There, the head and key members of the mission were given a

private audience with Chinese Premier Zhou Enlai.

Subsequently, the shift in Malaysia's China's policy became even clearer. This

was perhaps best reflected by the reversal of its stance on the PRC's admission to UN.

In October 1971, Malaysia voted in favor of the Albanian resolution, which called for

the PRC's membership and the expulsion of the Republic of China from the world

body. Soon after the vote, Malaysia began to initiate contacts to engage China, with

an eye for normalization. 21 These contacts paved the way for a series of dialogues and

negotiations between the two countries' representatives in New York, which, in turn,

led to Razak's historic visit to China and the joint communique announcing the

establishment of diplomatic relations in May 1974. Zakaria Ali, the then Malaysian

Permanent Representative to the UN who conducted negotiations with his Chinese

counterpart Huang Hua during the 1973-1974 period, recalls in a 2006 article that

normalization with China "was a bold and courageous step, given the prevailing

20
Prime Minister's remarks at the annual meeting of Commonwealth Prime Ministers, Singapore,
1971. In Foreign Affairs Malaysia 4:1 (March 1971), pp. 14-5.
21
The initial contact took place in late October 1971, when three Malaysian officials who were sent to
"accompany" the country's table tennis team to China were invited to a "surprise" meeting with
China's Acting Foreign Minister. This was followed by a large trade delegation to the Canton Spring
Fair in April 1972, during which Razak's advisor Raja Mohar Raja Badiozaman was secretly arranged
to meet with Zhou Enlai. See Chandran, Malaysia: Fifty Years of Diplomacy, pp. 106-7.

212
uncertainty, suspicion and mistrust borne out of a perceived communist threat."22

The turnabout in Malaysia's China policy was not only induced by structural

pressures, but also motivated by the ruling elites' desire to promote their security,

political, and economic interests. In terms of security, the Malaysian elites calculated

that, given the pending departure of their Western patrons, establishing relations with

Beijing was an imperative move to reduce or neutralize the threat of the MCP

guerillas, who were now restricted mainly to the Malaysia-Thailand border.

According to journalist Harish Chantola, the Malaysian government "has absolutely

no confidence that after Indo-China, Thailand will try to resist the mounting pressure

of communist insurgency and suspects that Thailand might make a compromise with

them. The next country to face the problem of communist hostility will be, it feels,

Malaysia. It, therefore, calculates that if Malaysia establishes relations with China,

then China might not be in a hurry to activate the Malaysian communist fighters and

its support to them might not be overt, which it is bound to be if there are no

diplomatic relations between the two countries." 23 This observation is echoed by

Malaysian veteran diplomat Zakaria Ali, who notes that normalization was a desirable

and logical option in order to severe the line of support "given by the PRC, certainly

by the Chinese Communist Party, to the MCP." 24

This security imperative was further reinforced by the prevailing domestic

political calculations in the wake of the ruling Alliance coalition's unprecedented

electoral setback in May 1969, as well as the grave communal riots (between the two

major ethnic groups, the Malays and Chinese) that followed. The electoral outcomes

22
Zakaria Mohd Ali, "Normalisation of Relations with China," in Fauziah Mohamad Taib, ed., Number
One Wisma Putra (Kuala Lumpur: Institute of Diplomacy and Foreign Relations (IDFR), Ministry of
Foreign Affairs, 2006), p. 120.

23
Harish Chandola, "Changes in Foreign Policy," Economic and Political Weekly, December 12, 1970,
p. 1996.

24
Zakaria, "Normalisation of Relations with China," pp. 124-5.

213
and the racial riots were seen as a clear indicator that UMNO was losing legitimacy

from its core Malay constituency. In order to reestablish its political authority and to

restore internal stability, the new leadership in the UMNO-led coalition government

was in need offormulating new directions for the country.

Internally, the new government sought to reclaim its political legitimacy

among its traditional Malay constituency by introducing the pro-Malay affirmative

action program in the form of the New Economic Policy (NEP) in 1971. The policy

set out to reduce poverty, to restructure Malaysian society, and to assure inter-ethnic

peace, chiefly by ensuring that the Bumiputeras 25 gained privileged access to

education, to scholarship, to employment in public sector, and to corporate wealth (by

setting the holdings of corporate assets by the Malays to 30 percent by 1990).26 In

addition, Razak government also moved to consolidate UMNO's dominance within

the ruling coalition by co-opting most opposition parties, thereby transforming the

Alliance into the enlarged Barisan Nasional (BN, the National Front) in 1973 27 These

political changes dramatically limited the role of the non-Malays' (especially the

Chinese) in Malaysia's political and economic life.28 In order to balance the situation

and allay the fears of the Chinese voters, Razak decided that "a move towards

25
The term literally means "sons of the soil." In practice, it is applied principally to the Malays, but
also the indigenous people in Sabah and Sarawak.
26
Gordon P. Means, Malaysian Politics: The Second Generation (Singapore: Oxford University Press,
1991), pp. 23-7.
27
Scholars like Chee and Crouch see this as a watershed event in Malaysian politics, which marked the
end of the consociational model that had served as the foundation of inter-communal compromises and
domestic political order in the multi-ethnic country for the past two decades. See Stephen Chee,
"Consociational Political Leadership and Conflict Regulation in Malaysia," in Stephen Chee, e d .
Leadership and Security in South East Asia: Institutional Aspects (Singapore: Institute of Southeast
Asian Studies, 1991), pp. 53-86; and Harold Crouch, Government and Society in Malaysia (Ithaca:
Cornell University Press, 1996), pp. 20-7.

28
Means, Malaysian Politics: The Second Generation, pp. 19-32; James V. Jesudason, Ethnicity and
the Economy: The State, Chinese Business, and Multinationals in Malaysia (Singapore: Oxford
University Press, 1989).

214
rapprochement with China would help to pacify the ethnic Chinese."29

Hence, externally, the Razak government decisively redirected the country's

foreign policy posture towards non-alignment and neutralization, as mentioned. This

move served to appeal not only to Malay nationalists and leftist groups. Given that

neutralization required the government to drop its earlier anti-Chinese stance and

make overtures to Beijing, the new posture had the effect of alleviating the alienation

of ethnic Chinese, winning over their support for the Razak government, and

improving inter-ethnic reconciliation in the post-riot environment. As observed by

Saravanamuttu, the vast majority of local Chinese saw the rapprochement as the

willingness on the part of a Malay-dominated government to acknowledge their

ancestral home. In addition, with the resolution of the nationality issue for the

200,000-odd stateless Chinese in Malaysia, the rapprochement also helped to clarify

the community's status and situation in the country. It was for these reasons that the

ethnic Chinese "could now look more favourably and confidently on the Razak

Government coming into power in the aftermath of the traumatic May 13 riots."30

Shafruddin Hashim adds that the rapprochement with China served to promote inter-

communal conciliation, chiefly by enabling the Malays "to view the PRC,

communism, and the local Chinese as separate entities."31 In the general elections that

were held little more than two months after Razak's China visit, the BN coalition won

an overwhelming victory. This significantly boosted the government's authority.

Economic considerations also played an important part in driving Razak's

decision to pursue regional neutralization and to normalize Malaysia's relations with

29
Razak Baginda, "Malaysian Perceptions of China," p. 235.

30
J. Saravanamuttu, "Malaysia-China Ties, Pre and Post 1974: An Overview," in Loh Kok Wah, Phang
Chung Nyap, and J. Saravanamuttu, The Chinese Community and Malaysia-China Ties: Elite
Perspectives (Tokyo: The Institute of Developing Economies, 1981), p. 29.

31
Shafruddin, "Malaysian Domestic Politics and Foreign Policy," p. 159.

215
China. Heiner Hanggi suggests that the Malaysian government's move was driven by

"an urgent need for a peaceful environment that would enable the country to

concentrate on national development especially in the economic field. Furthermore, it

was hoped that regional neutralization would reduce the defence burden hitherto

borne by the British and thus avoid the emergence of a 'guns-versus-butter'

dilemma." 32 These economic needs were reinforced by the government's desire to

increase and diversify Malaysia's commercial links beyond the major industrialized

countries. Being one of the largest rubber producing countries in the world, Malaysia

was particularly keen in capturing the potentially huge rubber market in China.

Driven in part by these economic incentives, a trade delegation was sent to Beijing as

early as May 1971 to establish direct trade links with China, as noted. The 19-person

delegation was led by Tengku Razaleigh Hamzah, chairman of Perbadanan Nasional

Berhad (PERNAS), a newly-created national trading company designed to promote

Malay entrepreneurship. Three months later, China sent a trade mission to Malaysia,

which resulted in a purchase of 40,000 tonnes of rubber, doubling the amount of the

preceding years.33

Singapore: Skeptical on Neutralization, Cautious on China Rapprochement

Malaysia's shifting China policy and its keenness to push for the regional

neutralization initiative was greeted with caution by its ASEAN partners, including

Singapore. This became apparent when Malaysia embarked on a diplomatic bid in

1970-1971 to obtain regional support for its neutralization proposal. The response

from the ASEAN countries was skeptical at best. Indonesia's Adam Malik, for

instance, expressed his reservations in September 1971: "it seems to me still a rather

32
Hanggi, ASEAN and the ZOPFAN Concept, p. 13.
33
Xia Ming, "Sino-Malaysian Trade Ties and Its Prospects," Economic Quarterly (April 1990), p. 22.

216
distant possibility to ever get the four major powers, given their divergent interests

and designs toward the area, voluntarily to agree to its neutralization."34 Singapore

held a similar view. At the ASEAN Conference of Foreign Ministers in Kuala

Lumpur in November 1971, its representative submitted an elaborate paper

questioning the feasibility of the Malaysian proposal.35 In 1973, Lee Kuan Yew said it

rather bluntly that "it was a fact of life both for the present and for the near future that

big power guarantees would not be forthcoming." 36

According to Dick Wilson, Singapore was probably aware that Malaysia's

proposal might have to do with the China factor. He quotes an editorial in The New

Nation that was published in Singapore just before the Kuala Lumpur conference:

Malaysia's strategy seems to be to offer a bait to China's regional neutralization -

which, its officials have now admitted, implies the eventual abrogation of the
Commonwealth five-power defense agreement and will also presumably mean an end
to SEATO and the American bases in both Thailand and the Philippines. 'If you live
up to the U.N. charter,' the ASEAN line to Peking could be, 'and stop this overt
interference in our affairs, then we will gradually disengage from our Western
military entanglements. But we must do it in step, and we want to see something from
your side, some evidence of change in your patronage of our local Communist
minorities, before we take the risk of sending our Western friends home.' If this is a
correct interpretation of Tun Razak's proposal, then it seems on the face of it to be a
good strategy. It would put the ball in Peking's court.37

On the important issue of China policy, although Singapore, like Malaysia,

also voted in favor of the PRC over the latter's claim to the China seat at the UN in

1971, it however did not follow in Kuala Lumpur's (and subsequently, Manila and

Bangkok's) footsteps to establish diplomatic relations with Beijing in the subsequent

years. Instead, the island-state only chose to make high-level visits to China in 1975

34
Quoted in Dick Wilson, The Neutralization of Southeast Asia (New York: Praeger, 1975), p. 53.

35
Hanggi, ASEAN and the ZOPFAN Concept, p. 17. As a result of the differences among the ASEAN
states, Malaysia's neutralization scheme was water-downed to a Declaration of Zone of Peace,
Freedom and Neutrality (ZOPFAN) at the Conference.

36
Wilson, The Neutralization of Southeast Asia, p. 81.

37
Ibid, p. 83.

217
and 1976 as a way to make rapprochement of sorts with Beijing, while openly

pledging that it will establish diplomatic relations with China only after all the other

ASEAN states had done so.

The reasons why Singapore was cool to regional neutralization and cautious

on China normalization were three-fold. First, in terms of security, Singapore

calculated that the best way to safeguard smaller states' survival in an uncertain

external environment was to cultivate a "multi-polar presence", one in which the U.S.

will remain engaged in the region. 38 This assessment was based in part on Lee's

judgment that the American involvement from 1954 to 1971 had provided non-

communist Southeast Asian governments with crucial breathing space that enabled

them "to put their own houses in order"; 39 and in part on the view that it would be

unrealistic "to expect the Great Powers to withdraw from a strategic and resource-rich

area and to provide guarantees of non-interference in internal affairs when they were

in constant competition for influence." 40

More importantly, the assessment was also owing to the leaders' concerns

about Singapore's security in the post-Vietnam regional order. Developments in

Indochina since the late 1960s led the PAP elites to realize that the war in Vietnam

was more than a localized conflict. In the words of Sinnathamby Rajaratnam, then

Singapore's foreign minister, because the conflict "is both a civil war and a big power

conflict there is no way of isolating the rest of Southeast Asia from the war in

38
Chan Heng Chee observes that, by the late 1960s, in the light of the British withdrawal and the
developments in Indochina, Lee Kuan Yew "had worked out the major requirements of Singapore
foreign policy. Firstly, a foreign policy for Singapore must be one that would encourage major powers
in the world to find it in their interests to help the island survive or at least to see that its situation does
not worsen. Secondly, Singapore must offer to the rest of the world a continuing interest in the survival
of the type of society it projects and finally, it would be imperative for Singapore always to have
'overwhelming power on our side.'" See Chan, "Singapore: Domestic Structure and Foreign Policy".;;
See also Obaid, "Foreign Policy," p. 291.

39
Lee Kuan Yew, From Third World to First, pp. 520-1.

40
Lau, Singapore, ASEAN and Regional Security, p. 13.

218
Vietnam. It can expand and spill over into other countries of Southeast Asia." 41 The

Soviet's intent to increase its naval presence in the Indian Ocean - as evidenced most

notably by the appearance of a Soviet vessel in Singapore during the Commonwealth

Heads of Government Meeting held there in January 1971 - along with the intensified

Sino-Soviet conflict, further convinced the Singapore leaders that the danger of war

spreading to the rest of the region was real. They were particularly worried about the

prospect of a Communist Indochina supporting the indigenous communist

insurgencies in Thailand and Malaysia. They reckoned that if the two neighbors to the

north were not able to resist the tide, Singapore will be the next in line. To prevent

this, the PAP elites believed that it is imperative for the non-communist countries to

strengthen their own socioeconomic development and domestic cohesion, while

externally striving to ensure a continued American involvement in the region 42

Driven largely by this security imperative, the city-state had made every effort

to influence the U.S. by repeatedly stressing to the superpower the importance of

staying engaged in the region. At a talk organized by the Asia Society in New York in

September 1973, for instance, Rajaratnam reminded his audience that "if America

opts out of Southeast Asia, it must eventually opt out of Asia as well and once out of

Asia, it ceases to be a global power. That distinction must then pass on to the only

other remaining global power - the Soviet Union." He then warned that the self-

demotion of America to a regional power "will create difficult problems not only for

the United States but also for non-communist Southeast Asian countries." He

continued:

if America wants to remain a global power and Southeast Asia non-communist, then
a second intervention in the area would be mutually advantageous. The first one
admittedly was disastrous simply because it was intervention in the wrong country, in
the wrong way and for the wrong reasons. ... Anti-colonial wars are unbeatable. ...

41
S. Rajaratnam, Singapore's Foreign Minister, Speech delivered at the Rotary District International
Conference, Singapore, 16 March 1968. In Chan and Obaid, eds, S. Rajaratnam, pp. 345-6.
42
Lee, From Third World to First, pp. 503-9.

219
 Vietnam is the last of the classical anti-colonial wars in Southeast Asia. But a new
kind of contest is beginning in the region in which American intervention can be far
more successful and rewarding ... The contest is for modernization and rapid
economic development. ... In this new contest in Southeast Asia, any intervention
which will speed up modernization and economic development, but without infringing
its integrity or self-respect, will meet with ready response. ... The second
intervention requires the massive export and deployment of modern technological
skills, financial resources, industrial expertise and commercial and organizational
know-how - and these the American possess in abundance. If this is the contest - and
this should have been the contest right from the start — then American has an assured
future in Southeast Asia. There will be a future as well for a non-communist
Southeast Asia if it too has the imagination, dedication and self-discipline to make
good use of the opportunities this second intervention can provide [italics added].43

Given that Singapore's overarching goal then was to ensure America's

indefinite presence in the region, it was not surprising that the city-state held

reservations over Malaysia's neutralization proposal, even though Lee Kuan Yew

himself had proposed the idea of regional neutralization just a few years earlier. In

April 1966, Lee remarked: "The best way to maintain peace and security would be to

leave Southeast Asia as a neutral area in which no major powers will use any of the

smaller countries as an extension of its own might, and at the same time guarantee the

integrity of each of these smaller nations against encroachments by the others."44

Security concerns also played an important role in driving Singapore's

decision to avoid following in Malaysia's footstep in establishing diplomatic relations

with Beijing, as the Philippines did in June 1975 and Thailand the following month.

Considering Communist China's ties with the local communist movements in

Southeast Asia, the PAP elites were unsure about China's future security role in the

region. According to Lau Teik Soon, Singapore had pointed to Beijing's "bellicose

statements" in support of the insurgencies and this has created doubts among the

regional states as to the sincerity of China's peaceful co-existence policy. Lau notes

43
S. Rajaratnam, Singapore's Foreign Minister, Speech delivered at the Asia Society, New York, 27
September 1973. In Chan and Obaid, eds., S. Rajaratnam, pp. 349-54.
44
Quoted in Noordin, "Towards a 'Neutral' Southeast Asia."

220
that on this point Singapore's stance coincided with that of Indonesia, who held the

view that "the diplomatic presence of the PRC in the ASEAN capitals at this stage

could be an 'added security risk'." 45

Such security concerns were further heightened by the PAP elites' domestic

and geo-political considerations. Lee Kuan Yew and his PAP colleagues - having

just consolidated their political position by defeating their Barisan Sosialis rivals

whom they accused as "Chinese chauvinists" - were uneasy about developing too

close a relationship with the PRC. They feared that China's political and cultural pulls

on the Chinese educated masses will complicate their effort to build a distinct

"Singapore identity" in the multi-ethnic, heterogeneous society, which was deemed

central to the island's sociopolitical cohesion and economic development, and hence

the very foundations of the PAP's domestic legitimation 46 The PAP government thus

took steps to shield its citizens from the undue influence of China. These included

banning Singaporeans under the age of 30 from visiting the PRC.

These domestic concerns were closely linked to the elites' sensitivity about

Singapore's geopolitical reality. Being an island of ethnic Chinese in a sea of Malays,

Singapore had always been mindful of its neighbors' tendency to see it as a "Third

China." 47 Driven by a desire to dispel such an image, the PAP leadership deliberately

45
Lau, Singapore, ASEAN and Regional Security, pp. 8-9.

46
Khong Cho-Oon, "Singapore: Political Legitimacy through Managing Conformity," in Muthiah
Alagappa, e d . Political Legitimacy in Southeast Asia (Stanford: Stanford University Press, 1995), pp.
108-135. His effort was perhaps best illustrated by the PAP government's policy in promoting English-
language education. As observed by Robert O. Tilman and Jo H. Tilman, "PAP leader felt that
Singapore citizens needed to be multi-lingual for practical reasons, but beyond this they regarded the
purely Chinese-medium schools as subverting the long-range goals of the country. Chinese schools
tended to produce leaders and followers of the "Chinese-chauvinist" wing of Singapore politics, and
history had shown that this wing also produced the majority of the Communist supporters and
sympathizers. In addition, Singapore's industrial development plans needed more English-educated
workers. Given these complementary goals, the PAP worked hard to convince Singaporeans that an
English-language education was desirable, if not necessary." See Robert O. Tilman and Jo H. Tilman,
"Malaysia and Singapore, 1976: A Year of Challenge, A Year of Change," Asian Survey 17:2
(February 1977), pp. 148-9.

47
Chan, "Singapore: Domestic Structure and Foreign Policy."

221
chose to "set a distance" between Singapore and China, declaring that Singapore will

not establish diplomatic ties with Beijing until "its closest neighbors" have done so.48

The same political concerns also drove Singapore to downplay elements of

cultural affinity in its dealings with China. This was made clear during Rajaratnam's

visit to China in March 1975, when he cautiously told his Chinese host that although

Singapore was predominantly Chinese ethnically, its political outlook had always

been and would continue to be shaped by the Southeast Asian environment, and that

"it there was a conflict between Singapore and China, the local Chinese must stand up

for Singapore." 49 A similar message was unambiguously stressed by Prime Minister

Lee to China's leaders, when he made his first visit to China in May 1976:

The more China embraced us as 'kinsman country' the greater would be our
neighbours' suspicions. It was difficult because Singapore's neighbours had
significant Chinese minorities who played a disproportionate role in the economy and
their economic success had aroused the jealousy and resentment of the indigenous
peoples. Where they were of different religions, there was little intermarriage as with
the Muslims in Malaysia and Indonesia. This was a never-ending problem that China
had to take into account. It was an important underlying factor in the relationship
between China and the other countries in Southeast Asia.50

These politico-security deliberations, however, were somewhat counteracted

by a pragmatic calculation to obtain greater economic gains from China. While the

island state had trade links with the PRC dating back to its pre-independence days, the

need to cope with the enduring uncertainties in the international economy in the

aftermath of the 1973 world energy crisis provided impetus for Singapore to further

develop its economic relations with the giant neighbor. It was largely driven by this

impetus that Rajaratnam made a visit to China in 1975. The visit, which was the first

48
Ibid. Stephen Chee suggests that this presumably meant Indonesia, because it was "the only other
ASEAN country that still did not have diplomatic relations with China" at that time. See "Malaysia and
Singapore: The Political Economy of Multiracial Development," Asian Survey 14:2 (February 1974), p.
189.

49
R.S. Milne, "Malaysia and Singapore, 1975," Asian Survey 16:2 (February 1976), p. 192.
50
Lee Kuan Yew, From Third World to First, p. 649.

222
"official" visit between the two countries since Singapore's independence, was hoped

to result in more trade with China. The move was a part of the PAP government's

strategy to diversify Singapore's economy and construct the island state as a "global

city", to reduce its economic dependency - and political vulnerability - on its

immediate neighbors. 51 This was more than an economic strategy. As observed by one

analyst, "Singapore's economic policies are the most important expression of its

external politics because while external aggression is unlikely at this time, economic

stagnation and depression would without doubt end the island's quest for political
52

independence."

The PAP leaders apparently reckoned that their goal of increasing trade with

China did not necessarily or immediately require Singapore to establish diplomatic

relations with Beijing. 53 After all, over the past decade the bilateral trade had

developed steadily even in the absence of official links between the two sides. In view

of this, the Singapore government decided that making high-level visits was sufficient

to serve the purpose of facilitating trade and making rapprochement of sorts with the

big power, while practically enabling the city-state to avoid exposing itself to

undesired political and security risks. A little more than a year after Rajaratnam's

historic trip, Lee Kuan Yew himself made his first state visit to China in May 1976.

The visit lasted half a month.

In brief, it was due to the needs of the ruling elites to strike a balance between

51
S. Rajaratnam, "Singapore: Global City," Text of an address to the Singapore Press Club, February
6, 1972.
52
Erik C. Paul, "The Viability of Singapore: An Aspect of Modern Political Geography" (Ph.D.
Dissertation, University of California, Berkeley, 1973), p. 312. Quoted in Obaid, "Foreign Policy," p.
289.
53
When asked by an American scholar as to why Singapore did not establish formal diplomatic
relations with the PRC, a Singapore senior government official responded by asking: "What would we
get out of formal ties? As it is we have no problems dealing them on all important matters, and we have
all the machinery in place for trading with them. Why do we need anything more formal?" See Robert
Tilman, Southeast Asia and the Enemy Beyond: ASEAN Perceptions of External Threats (Boulder &
London: Westview Press, 1987), p. 90.

223
economic interests and politico-security concerns that Singapore decided to forge an

incomplete and low-key rapprochement with Beijing by making two high-level visits

but short of establishing diplomatic relations with the Asian giant.

1976-1989:
Anchoring on ASEAN and Keeping Links with the West, While
Adopting Economic Pragmatism towards China

Regional security in Southeast Asia entered a new phase in the mid-1970s. After the

stunning victories of the Soviet-backed communist troops in Phnom Penh and Saigon

by April 1975, the ASEAN states now found themselves directly exposed to the risks

of revolutionary forces from the north. By July 1976, the U.S. had withdrawn all its

forces from Thailand. These developments altered the balance of power between the

Moscow-backed Hanoi and the non-communist regional states, and aroused concerns

about America's will to come to the defense of ASEAN countries should they face

external aggression. In addition, they also intensified the Sino-Soviet rivalry as they

vied to fill the power vacuum in Indochina.54 All these took place at a time when

Australia and Britain had just pulled out their remaining troops from Singapore. These

events combined to create a grave uncertainty in the external environment of the

smaller countries.

Such structural changes brought tremendous pressures on Malaysia and

Singapore (and their ASEAN partners), forcing them to rethink their external

relations. Realizing that they now shared a common destiny in the face of a growing

communist threat from the north, the smaller states had begun to anchor on ASEAN as

a platform to converge and coordinate their diplomatic efforts, while working to keep

their ties with the U.S. and other dialogue partners as a source to strengthen their

54
See K.K. Nair and Chandran Jeshurun, eds., Southeast Asia and the Great Powers Kuala Lumpur:
Malaysian Economic Association, 1980); Robert J. McMahon, The Limits of Empire: The United States
and Southeast Asia Since World War / / ( N e w York: Columbia University Press, 1999), pp. 182-217.

224
strategic position vis-a-vis the communist powers.

In response to the deteriorating situation in Indochina, the leaders of the

ASEAN states met in Bali, Indonesia in February 1976. This historic meeting - the

first ever summit since the inception of the regional body a decade earlier - produced

a number of key documents that set the direction for ASEAN's future development.

These included a Declaration of ASEAN Concord, a Treaty of Amity and

Cooperation in Southeast Asia (TAC), and an agreement to set up a permanent

secretariat in Jakarta. These documents were important in that, in addition to holding

out an olive branch to Vietnam by expressing ASEAN's willingness for peaceful

coexistence, they also spelt out the principles of conduct governing inter-state

relations for the promotion of "collective political security" in the region.55

With the adoption of these core documents, the role of ASEAN had effectively

moved from one of seeking regional reconciliation in the aftermath of Konfrontasi, to

one of building "regional resilience" through closer political and economic

cooperation among the non-communist countries, as a way to safeguard them from

the growing communist threat. 56 The term "regional resilience" was extended from

the concept "national resilience" (as coined by Indonesian elites), which stresses on

the importance of state-led economic development as the "first line of defense"

against internal subversion and external aggression.57 These internal efforts were seen

55
Donald E. Weatherbee, International Relations in Southeast Asia: The Struggle for Autonomy, 2nd
edition (Lanham, MD: Rowman & Littlefield, 2009), pp. 76-7.

56
Derek Davies, the editor of the Far Eastern Economic Review, observed in 1976 that Indonesian
elites have argued that "after Vietnam, every nation must erect its own defences against internal
subversion by achieving economic independence - a process which would develop into regional
resilience within the framework of ASEAN." See his article "The Region," Far Eastern Economic
Review Asia 1976 Yearbook, p. 22. On the conception of national and regional resilience, see Dewi
Fortuna Anwar, "National versus Regional Resilience? An Indonesian Perspective," in Derek da
Cunha, e d . Southeast Asian Perspectives on Security (Singapore: ISEAS, 2000), pp. 81-97.

57
On the nexus between development and security, see Chai-Anan Samudavanija and Sukhumbhand
Paribatra, "Development for Security, Security for Development: Prospects for Durable Stability in
Southeast Asia," in Kusuma Snitwongse and Sukhumbhand Paribatra, e d s . Durable Stability in
Southeast Asia (Singapore: ISEAS, 1987), pp. 3-30.

225
as a foundation, and indeed, the sine qua non for regional collaboration under the

framework of ASEAN, which, by way of enabling the regional countries to avoid

intra-mural conflict and focus on developing their own economy, was in turn expected

to beef up the individual governments' capacity to rule.58

Besides making these internal and regional endeavors, the leaders of the

ASEAN countries - particularly Singapore but also other regional states - also took

steps to retain the continuing regional role of the U.S., whom they viewed as best

serving their interests in balance of power terms. 59 As noted by Chin Kin Wah, even

though some ASEAN countries "may be less disposed to express their interests in an

American military presence in the region, all of them are favorably inclined towards

an American underpinning of their political and economic viability."60 Despite the

Vietnam debacle, ASEAN states had continued to see Washington as an indispensable

actor in upholding regional order and assisting them to complement, augment, and

strengthen their position to deal with the outside world.61 Among the ASEAN leaders,

Lee Kuan Yew was perhaps the most candid and consistent in acknowledging the

U.S. role for regional security and prosperity:

Although American intervention failed in Vietnam, it bought time for the rest of
Southeast Asia. In 1965, when the US military moved massively into South Vietnam,
Thailand, Malaysia and the Philippines faced internal threats from armed communist
insurgencies and the communist underground was still active in Singapore.
Indonesia, in the throes of a failed communist coup, was waging konfrontasi, an
undeclared war against Malaysia and Singapore. The Philippines was claiming Sabah
in East Malaysia. Standards of living were low and economic growth slow.
America's action enabled non-communist Southeast Asia to put their own houses in

58
See Ghazali, "National Developments in South East Asian Countries: Towards National Resilience,"
in his Malaysia: International Relations, pp. 272-84.

59
Leifer, Singapore's Foreign Policy, p. 102.

60
Chin Kin Wah, "The Reawaking of U.S. Interest in Southeast Asia," in K.K. Nair and Chandran
Jeshurun, eds., Southeast Asia and the Great Powers (Kuala Lumpur: Malaysian Economic
Association, 1980), p. 123.

61
These included Malaysia, whom, despite its pronounced stance of non-involvement in big power
rivalry, continued to see the value of American power in complementing Malaysia's foreign policy
actions. This can be discerned from the writings and speeches of the country's policy elites during that
time. See, for instance, Ghazali, Malaysia: International Relations, p. 280.

226
 order. By 1975 they were in better shape to stand up to the communists. Had there
been no US intervention, the will of these countries to resist them would have melted
and Southeast Asia would most likely have gone communist. The prosperous
emerging economies of ASEAN were nurtured during the Vietnam War years [italic
added].6

While Malaysia and Singapore's security position was augmented to some

extent by the existence of the FPDA, the leaders of the two states knew full well that

the efficacy of such arrangement was subject to the U.S. role. As observed by Obaid

Ul Haq, "The value of the Five Power Defence arrangements lay primarily in its

psychological import. By the late 1970s even this psychological value was seen as a

function of the overall American policy and interests in South-East Asia. In 1978 Lee

Kuan Yew said, 'Whether it [FPDA] will continue to have any relevance depends not

simply on Australia and New Zealand, but on the US, her policies and postures in the

Pacific and Indian Ocean. ... As long as the US is seen clearly to be a force in the

region, these residual token forces are not irrelevant as tokens.'" 63

Despite the fact that the Carter administration (1976-1980)'s new foreign

policy agenda in championing human rights, in placing more emphasis on Africa than

on Asia, and in planning to withdraw troops from South Korea had agitated

Washington's Asian partners who became more concerned about the possibility of

American retreat from the region, Singapore and other Southeast Asian leaders had

continued to advocate for a sustained American presence in the region.64

Beyond individual countries' diplomatic endeavors, the effort to retain the

U.S.' involvement was also made at the regional level.65 In 1977, the U.S. became

62
Lee Kuan Yew, From Third World to First, pp. 520-1.

63
Quoted in Obaid, "Foreign Policy," p. 287.

64
In his memoirs, Lee recounted how he took the initiative to raise the subject to President Carter
during their meeting in October 1977, by emphasizing to the latter "how important America was for the
stability and growth of the region, and how it should not lose its focus as it might weaken the
confidence of non-confidence of non-communist countries who were its friends." See From Third
World to First, p. 524.

227
ASEAN's dialogue partner, along with Japan, Canada, and the United Nations

Development Programme (UNDP). ASEAN's other dialogue partners were: the

European Economic Community (since 1972), Australia (1974), and New Zealand

(1975). 66 In 1978, ASEAN's consultation with its partners was institutionalized as the

Post-Ministerial Conference (PMC), a collective forum held after the annual ASEAN

Ministerial Meeting (AMM) and attended by foreign ministers from all ASEAN

countries and their dialogue partners.

The dialogue mechanism was important for both economic and non-economic

reasons. It facilitated ASEAN states' efforts to obtain more investment opportunity

and technical assistance from the developed world, while allowing them to discuss

regional security issues with their non-communist partners on a regular basis.67 More

importantly, the involvement of the extra-mural powers (especially the U.S.) in this

dialogue mechanism also served to showcase their solidarity with ASEAN and to

"restore some sort of strategic balance in the region."68

The need for such a policy reorientation - i.e. giving a greater emphasis on

ASEAN as the cornerstone of their foreign policy while continuing to look upon the

U.S. and other dialogue partners as the principal source of external assistance - was

reinforced in the late 1970s, after Vietnam invaded Cambodia in December 1978 and

after Soviet troops marched into Afghanistan in December 1979. The latter marked

the breakdown of the superpower detente and the advent of the second Cold War.

For the elites in the non-communist ASEAN capitals, these events had the

65
The first US-ASEAN consultation was held in Manila in September 1977. See Sodhy, The US-
Malaysia Nexus, p. 346.

66
In 1977, at the second ASEAN Summit in Kuala Lumpur, the heads of governments of three non-
member states from outside the region - i.e. Japan, Australia, and New Zealand - respectively took part
in dialogue sessions with the ASEAN leaders. See ASEAN Secretariat, "Linkages Outside the Region,"
http://www.aseansec.Org/l 1849.htm

67
B.A. Hamzah, ASEAN Relations with Dialogue Partners (Kuala Lumpur: Pelanduk Publications,
1989).
68
Antolik, ASEAN and the Diplomacy of Accommodation, p. 141.

228
effect of swinging the gravity of their policy attention back to military security issues.

The Vietnamese invasion and occupation of Cambodia, in particular, put an end to

ASEAN states' hope for peaceful coexistence with communist Indochina.69 Hanoi's

act was seen as a blatant violation of the sanctity of national sovereignty as stressed in

the TAC. 70 According to Michael Leifer, the ASEAN states could not afford to

endorse such a violation because doing so "would have indicated tolerance for a

precedent with disturbing implications for the security of all member states."71 They

saw the risks of greater regional instability if the present conflict spilled into the
72

neighboring areas.

The non-communist states were thus forced to oppose the Soviet-backed

Vietnamese aggression openly. They rallied behind ASEAN and began to act as a

"diplomatic community"; while at the same time closing ranks with their Western

partners in what was later called the Third Indochina War.73 Largely due to the

activism of Thailand (a frontline state because of its proximity to Cambodia) and

Singapore (who was always concerned about the danger of aggression by a larger

neighbor), the ASEAN states mounted a collective diplomatic campaign to deny

international recognition to the Hanoi-installed regime in Phnom Penh, and demanded

the withdrawal of all foreign forces and the restoration of Cambodian sovereignty.74

These diplomatic efforts were augmented by a strategic endeavor of working

69
Donald E. Weatherbee, Historical Dictionary of United States-Southeast Asia Relations (Lanham,
MD: Scarecrow Press, 2008), p. 19.
70
Lee Poh Ping, "The Indochinese Situation and the Big Powers in Southeast Asia: The Malaysian
View," Asian Survey 22:6 (June 1982), p. 517.

71
Leifer, ASEAN and the Security of South-East Asia, p. 10.

72
K.K. Nair, "Great Power Politics and Southeast Asia," in K.K. Nair and Chandran Jeshurun, eds.
Southeast Asia and the Great Power (Kuala Lumpur: Malaysian Economic Association, 1980), p. 13.

73
Leifer, ASEAN and the Security of South-East Asia; Antolik, ASEAN and the Diplomacy of
Accommodation, pp. 108-54.

74
Amitav Acharya, Constructing a Security Community in Southeast Asia, 2nd edition (London and
New York: Routledge, 2009), pp. 99-109.

229
with the Western powers, particularly the U.S., who, out of its need to curb Soviet

expansion after Afghanistan, had "rediscovered" the strategic significance of

Southeast Asia. 75 The U.S. increasingly saw ASEAN as a "potent diplomatic

coalition" that was instrumental in handling the Cambodian crisis.76

The congruence of strategic interests between ASEAN and the U.S. in the

post-1979 milieu thus led to a closer military relationship between the two sides.

While carefully avoiding any direct military involvement this time around,

Washington had moved to provide military assistance - in the form of military grants,

arms supply, and training of military personnel - to the ASEAN states in order to

build up indigenous military capability. These included not only Thailand and the

Philippines who remained the formal U.S. allies through the 1954 Manila Pact, but

also the Malacca Strait littoral states of Indonesia, Malaysia, and Singapore. On the

part of the ASEAN countries, they mostly welcomed a firmer American security

commitment, including its pledge to come to Thailand's defense in the event of

Vietnamese invasion. They also viewed the U.S. presence in the Subic Bay and Clark

Air Force bases in the Philippines as serving the functions of deterrence and

preserving the balance of power in the region. This positive assessment was

subsequently reinforced by the U.S. ability to accept and accelerate the intake of the

"boat people" - hundreds of thousands of Vietnamese refugees (predominantly ethnic

Chinese) who fled the communist takeover - from the overcrowded camps in the

ASEAN countries.

Consequently, for the period 1979-1989, as the Cambodian conflict continued

to drag on, the ASEAN states had, on the whole, become more aligned with and more

75
Chin, "The Reawakening of U.S. Interest in Southeast Asia,"

76
Karl D. Jackson, "U.S. Policy, ASEAN, and the Kampuchean Crisis," in Robert A. Scalapino and
Jusuf Wanandi, eds., Economic, Political, and Security Issues in Southeast Asia in the 1980s (Berkeley,
CA: Institute of East Asian Studies, University of California, Berkeley, 1982), pp. 124-39.

230
dependent on the U.S. for their external security.77 In the case of Malaysia, although

its leaders at the formal level still stressed on regional neutralization and equidistance

with the big powers, the expansion of Vietnamese and Soviet influence as well as the

intensification of Sino-Soviet rivalry in Indochina had compelled Kuala Lumpur to

follow the American lead on security issues.78 In the case of Singapore, its policy

adjustment was more apparent. By the late 1970s, the island-state had noticeably

moved away from its long-pledged non-alignment policy. In January 1980, its foreign

minister Dhanabalan suggested openly that should Singapore's security be threatened,

it would put aside any "puristic idea" of non-alignment and "tap big power interest if

it coincides with our interests." 79

It must be noted that the closer ASEAN-U.S. ties since the late 1970s were not

merely a result of their overlapping security interests, but also a product of growing

economic intimacy. In part because of the growing trade volume between the two

sides, and in part because of the ASEAN states' ongoing efforts to expand and

diversify their economic structure, the smaller states' economic performance had

become more and more tied up with that of the U.S. and other developed countries,

who remained the major source of capital and technology to the ASEAN region.80

Singapore's efforts since the mid-1970s to develop its service sector in the areas of

international finance, tourism, transport and other services, for instance, had the effect

of increasing the economic importance of the U.S. to the city-state. Similarly, the

77
Jusuf Wanandi, "The United States and Southeast Asia in the 1980s," in Scalapino and Wanandi,
Economic, Political, and Security Issues in Southeast Asia in the 1980s, pp. 111-23.

78
Hari, "Malaysia and the Communist World," pp. xxv-xxvii.

79
Sunday Times (Singapore), 13 January 1980. Quoted in Chin, "The Reawakening of U.S. Interest in
Southeast Asia," p. 124.

80
John H. Holdridge, the then U.S. Assistant Secretary of State for East Asia and Pacific Affairs, noted
that: "from the beginning, a central element of strength in the U.S. relationship with ASEAN countries
has been economic interest and commerce." Since 1980, ASEAN had emerged as the U.S. fifth largest
trading partner, and a main destination of American investment. See Holdridge, "The U.S.-ASEAN
Relationship: A Status Report," in Scalapino and Wanandi, e d s . Economic, Political, and Security
Issues in Southeast Asia in the 1980s, pp. 140-4.

231
Malaysian government's export-led industrialization policy since the 1970s - as

accentuated by the 1971 Free Trade Zone Act that was aimed at attracting foreign

direct investment in the country's export-oriented manufacturing sector - had resulted

in a marked increase in the participation of U.S. MNCs in producing electronic and

semiconductor products for export purposes.81 In 1977, the American Business

Council of Malaysia was established in Kuala Lumpur.

A similar dynamic also underpinned the ASEAN states' ties with other trading

partners, especially Japan. The Fukuda Doctrine of 1977 - as enunciated by Prime

Minister Takeo Fukuda during his Southeast Asian tour in August that year - was a

watershed in ASEAN-Japan relations. By rejecting any military role for itself in

Southeast Asia, by emphasizing its intent to promote ties based on the principle of

"heart-to-heart" understanding, and by expressing its commitment to be "an equal

partner" of ASEAN, the doctrine served to reassure the Southeast Asian leaders who

until then had perceived Japan in a negative light, largely because of their memory of

Japanese aggression in the Second World War and their present concerns about

Japanese "economic over-presence" in Southeast Asia.82 To demonstrate its

commitment, Japan pledged to increase its financial and technical aid to ASEAN

countries under its Official Development Assistance (ODA) program. This served as a

catalyst to forge closer economic cooperation between the two sides.83 Despite some

controversies over the terms of Japanese aid, the ASEAN leaders had in the main

welcomed Japan's increased role, seeing it as a positive factor for their efforts to build

up national and regional resilience. The ASEAN-Japan economic ties were further

81
Shakila Yacob, The United States and the Malaysian Economy (London: Routledge, 2008), p. 155.

82
William W. Haddad, "Japan, the Fukuda Doctrine, and ASEAN," Contemporary Southeast Asia 2:1
(June 1980), pp. 10-29; Franklin B. Weinstein, "Japan and Southeast Asia," in Scalapino and Wanandi,
eds., Economic, Political, and Security Issues in Southeast Asia in the 1980s, pp. 184-94.

83
Sueo Sudo, "Japan-ASEAN Relations: New Dimensions in Japanese Foreign Policy," Asian Survey
28:5 (May 1988), pp. 509-25.

232
enhanced after the mid-1980s, following the Plaza Accord of 1985 that caused the

Japanese yen to appreciate against the U.S. dollar and ASEAN currencies. This

development, along with the shift in the Japanese manufacturing structure toward

high-tech production and an increase in the wage rate in the more developed

economies in Asia, combined to make ASEAN countries an attractive destination for

investors from Japan as well as the Newly-Industrialized Economies (NIEs).84 The

1980s thus witnessed a boom in Japanese (and NIEs) investment and the relocation of

Japanese export-oriented industries to the region. The net result was the growth of a

dense regional production network and the emergence of the so-called "flying geese"

pattern of industrial development in East Asia.

Economic ties aside, the ASEAN countries and Japan also forged cooperation

in political and regional security spheres. Upon the suggestion of Japanese foreign

minister Sunao Sonoda, the ASEAN-Japan Foreign Ministers' Meeting was held in

June 1978.85 The ASEAN-Japan political cooperation was enhanced after Vietnam's

invasion of Cambodia in December 1978. Japan terminated its aid to Hanoi, threw its

support for ASEAN's position on Cambodia, launched a quiet diplomacy to act as an

intermediary between ASEAN and Vietnam, and endeavored to include the

Cambodian issue in the G7 Summit Statement in 1981.86 According to Glenn Hook,

Tokyo also moved to "increase its burden-sharing efforts for US security strategy in

the region", by increasing its strategic aid to American allies and countries bordering

the areas of conflict.

84
Narongchai Akrasanee and Apichart Prasert, "The Evolution of ASEAN-Japan Economic
Cooperation," in Japan Center for International Exchange, ASEAN-Japan Cooperation: A Foundation
for East Asian Community (Tokyo: Japan Center for International Exchange, 2003), pp. 63-74.

85
Sueo Sudo, International Relations of Japan and South East Asia (London: Routledge, 2002), pp.
50-5.
86
Glenn D. Hook, Japan's International Relations: Politics, Economic and Security, 2nd edition
(London: Routledge, 2005), p. 222.

233
 The convergence of geostrategic and economic interests in the aftermath of

1979 thus caused the ASEAN states and their extra-mural dialogue partners -

spearheaded by Washington - to align with each other throughout the second Cold

War period. This de facto alignment - cemented by their common opposition to the

Soviet-backed Vietnamese presence in Cambodia and dictated by a growing economic

congruence among them - constituted the basis of the regional order in Asia Pacific

for the next decade or so. By the mid-1980s, the U.S. had emerged as both the de

facto principal security patron and the main economic partner for the ASEAN

countries, including Malaysia and Singapore.

Despite this positive trend, some bilateral irritants did exist between the U.S.

and individual ASEAN states. In the case of Malaysia-U.S. relations, Kuala Lumpur

was unhappy about Washington's increasing protectionist tendency and its actions

that resulted in a fall in the price of tin and rubber, which severely affected Malaysia's

source of income. In addition, Malaysia was also disturbed by U.S. growing overtures

to the PRC, particularly the Reagan administration's decision to sell lethal weaponry

to China, whom Malaysian elites had persistently perceived as the largest long-term
• oo

threat to Malaysia and Southeast Asia. Kuala Lumpur's apprehension over

Washington's growing military ties with Beijing was also shared by Indonesia, and to

some extent, Singapore. Prime Minister Lee Kuan Yew remarked: "a well-armed

China may become a greater problem for South-East Asia." 89

Significantly, in addition to worrying about the longer-term ramifications of

the emerging U.S.-China alignment as well as the uncertainty surrounding the U.S.'

commitment to their security, the smaller countries in the region also feared that their

closer strategic cooperation with the U.S. might invite negative responses from the
87
Ibid.

88
Sodhy, The US-Malaysia Nexus, pp. 401-2.
89
Cited in Lee Poh Ping, "The Indochinese Situation and the Big Powers in Southeast Asia," p. 520.

234
Soviet camp. As noted by Chandran Jeshurun, while the ASEAN states had to

different degrees desired an American role in the preservation of Southeast Asian

security, they were nonetheless concerned about "the manner in which the United

States could fulfill such a role without appearing to be obstructive and thus attracting

a negative response from both the Indochina states as well as the Soviet Union." 90

This observation was echoed by Hari Singh:

"Although Malaysia had sought to offset the disequilibrium in power by seeking

closer security ties with the other pole of superpower, the American decision to
invoke the 'China card' in the strategic triangle forced Malaysia into an informal
alignment with China. Ironically, this aggravated Malaysia's security dilemma. First,
partiality in the Sino-Soviet conflict invited Soviet retaliation in Malaysian domestic
politics, the possibility being that Moscow would aid a splinter group of the
Communist Party of Malaya (CPM). Second, the prospects of Vietnam's collapse
under US-China-ASEAN pressure would have meant unfettered Chinese influence in
Southeast Asia. Finally, the possibility of the Soviet Union invoking its treaty
commitments to Vietnam had the potential of a great power war being fought in
Southeast Asia."91

Malaysia and Singapore's concerns over the drawback of aligning too closely

with the U.S., as noted above, reflect a recurring strategic dilemma facing all smaller

states. As the Lilliputians constantly sandwiched between competing giants, smaller

actors tend to be acutely aware of the possible consequences of the uncertainties at

the structural level - i.e. how the capricious nature of the big powers' commitment as

well as the changeability in the distribution of capabilities among the giants might

have an adverse impact on their own survival. Given that no one could be sure of how

the big powers' relations might evolve in the future, the smaller states know that they

cannot afford to completely antagonize any of the big powers, especially those who

are in the position of hurting them if they wanted to. Besides, there is also a deep-

seated fear that they might be unnecessarily drawn into a big-power war.

It was largely due to such high-uncertainties and high-stakes that although the

ASEAN states had all continued to align with Western countries throughout the

90
Jeshurun, "The Southeast Asian Perspective of Great Power Interests," p. 63

91
Hari, "Malaysia and the Communist World." p. 8.

235
second Cold War period, they had also conspicuously avoided placing all their bets

on one single option. Instead of completely taking side with one power, the smaller

actors had carefully moved to cultivate a degree of independence by seeking some

form of detente with the communist powers.

Malaysia, for instance, in the wake of Western military disengagement from

Southeast Asia, had sought to explore and establish closer working relationships with

the communist powers. After normalizing its ties with the Soviet Union in November

1967, the Malaysian government ventured to establish diplomatic relations with

Vietnam and China in March 1973 and May 1974, respectively. Although Kuala

Lumpur's effort to attain detente with the communist world began to lose steam in the

latter half of the 1970s largely as a result of the developments in Indochina, Malaysia

continued to accommodate and maintain some form of "correct relations" with each

of these communist powers throughout this period. 92

Malaysia's relations with the communist powers, however, were structurally

limited by the underlying ideological divisions and political distrust. Malaysian-

Soviet relations were badly affected not only by Moscow's invasion of Afghanistan

that angered Malaysia's Muslim population, but also by two exposes of KGB-related

espionage activities in 1976 and 1981. According to Malaysian scholar K.S. Nathan,

these incidents strengthened the Malaysian government's view that "Communist

embassies should be under close surveillance, and that contacts between their

personnel and the Malaysian populace should be discouraged as far as possible."93

The Malaysian-Vietnamese relations were similarly constrained by a clear divergence

in their political and security interests. Hanoi's invasion of Cambodia and the

dramatic influx of Vietnamese refugees into Malaysia in 1978 made Vietnam an

immediate policy focus for elites in Kuala Lumpur. The invasion not only reinforced

92
Hari, "Malaysia and the Communist World."
93
K.S. Nathan, "Malaysia and the Soviet Union," Asian Survey 27: 10 (October 1987), p. 1072.

236
Malaysian leaders' perceptions of the Vietnamese threat, but also deepened their

concern about the escalating risks of the Sino-Vietnamese and Sino-Soviet conflicts.

In the case of Singapore, its relations with the communist powers were

similarly driven by growing strategic and economic needs but limited by lingering

political distrust and security concerns. Like Malaysia, in part because of economic

reasons and in part of the strategic imperative of maintaining a working relationship

with the communist countries in the wake of the reduced Western commitments,

Singapore also moved to establish diplomatic relations with the Soviet Union and

Vietnam in June 1968 and 1972, respectively. Like Malaysia, Singapore's relations

with the communist powers were similarly constrained by ideological divide and

security divergence, especially after Hanoi's invasion of Cambodia and Moscow's

invasion of Afghanistan. But unlike Malaysia, who held a more ambivalent view

about Hanoi largely because of its own desire to see Vietnam playing a check and

balance role against China (whom Malaysia perceived as the larger threat to Southeast

Asia in the long run), Singapore took a much stronger stance against the Vietnamese

aggression of Cambodia.

Being a smaller state surrounded by larger neighbors in a volatile region,

Singapore saw the aggression as a dangerous precedent that would bring undesired

ramifications for its own security. It also regarded Moscow's support for Hanoi and

its subsequent invasion and occupation of Afghanistan as part of Soviet's strategy to

expand communism and to fill the power vacuum at the time of "the liquidation of

Western empires." 94 The occupation of Cambodia was viewed as "the first of many

moves to draw the rest of Southeast Asia within the Soviet orbit."95 In order to halt

94
S. Rajaratnam, Singapore's Minister for Foreign Affairs, speech at a mass rally held in conjunction
with the 25 th anniversary of the People's Action Party, Singapore, January 20, 1980. In Kwa Chong
Guan, e d , S.Rajaratnam on Singapore: From Ideas to Reality (Singapore: World Scientific and
Institute of Defence and Strategic Studies, 2006), p. 48.

95
S. Rajaratnam, Singapore's Second Deputy Prime Minister (Foreign Affairs), speech at the Asia
this development and to prevent any further worsening of the situation, Singapore for

the first time played a proactive role in regional affairs. It became the most outspoken

critic of Vietnam, and sought to work with other ASEAN states to formulate a

common Indochina policy. Together, these states moved to forge a multi-pronged

strategy of: (a) confronting Vietnam with ASEAN unity, (b) mobilizing world public

opinion against Vietnam and Soviet, and (c) securing the support of major powers

(especially that of the U.S.) for the ASEAN position.96 One observer notes that in the

process, Singapore had played the key role as the "initiator, organizer and coordinator

of most of the ASEAN activities" to solve the conflict in and around Cambodia. 97 It

provided the leadership in engineering the anti- Vietnamese Coalition Government of

Democratic Kampuchea (CGDK) headed by Prince Norodom Sihanouk, and

facilitating ASEAN moves to exploit the potential of the 1983 Non-Aligned

Conference to get the ASEAN position on Cambodia before the delegates.98

Malaysia and Singapore's relations with Communist China, in comparison,

were more intricate. Throughout the period 1976-1989, both countries' relations with

China had remained ambivalent. While the growing desire on the part of the smaller

states to tap into China's market - after the latter's reform policy since 1978 and after

the global economic recession in the mid-1980s - had increasingly driven them to

develop their economic cooperation with China, their political ties with the giant had

remained cool well into the late 1980s. It is to this aspect that I now turn.

Society Seminar on Singapore, New York, October 3, 1980. Quoted in Peter Schier, "The Indochina
Conflict from the Perspective of Singapore," Contemporary Southeast Asia 4:2 (September 1982), pp.
226-35.

96
Chee-Meow Seah, "Singapore 1979: The Dialectics of Survival," Asian Survey 20:2 (February
1980), pp. 144-54; Obaid, "Foreign Policy," p. 297.

97
Schier, "The Indochina Conflict from the Perspective of Singapore."

98
Robert O. Tilman, The Enemy Beyond: External Threat Perceptions in the ASEAN Region
(Singapore: ISEAS, 1984), p. 16.

238
Malaysia's China Policy, 1976-1989:

Between Lingering Political Distrust and Growing Economic Pragmatism

1976 was an eventful year for Malaysia. The dramatic shift in external environment

coincided with a change in the country's leadership, when Prime Minister Tun Razak

who died of leukemia in January 1976 was succeeded by his deputy Hussein Onn.

Under Tun Hussein's tenure from 1976 to 1981, Malaysia's China policy was marked

by an ambivalent mixture of lingering political distrust and growing economic

imperative. This pattern persisted into the early years of Dr Mahathir Mohamad's

premiership, who replaced Tun Hussein in July 1981 when the latter stepped down for

health reasons. While Mahathir's 1985 visit to China had the effect of deepening the

dynamics of economic pragmatism, it did not remove Malaysia's distrust of Beijing,

which lingered on throughout the final decade of the Cold War.

Despite the rapprochement with China in 1974, Malaysian leaders from Razak

to Hussein had continued to view Beijing with distrust and apprehension. They were

upset over China's continuing ties with the banned Malayan Communist Party

(MCP), which sought to overthrow the BN government by force. Leaders in Kuala

Lumpur repeatedly protested over China sending fraternal greetings to MCP, and

vehemently objected to Beijing's dual-track policy of separating government-to-

government relations and party-to-party ties (which meant the relationship between

the Chinese Communist Party and the communist parties elsewhere were separate

from government-to-government relationship).99 Joseph Liow observes that while

Chinese leaders attempted to placate the concerns of Malaysian leaders by reiterating

that their support of the MCP was necessary in order to prevent Soviet influence being

exerted on the party and that the support was limited only to moral support, the latter

remained unconvinced.100 In addition, the leaders were also concerned about Beijing's

99
Robert O. Tilman and Jo H. Tilman, "Malaysia and Singapore 1976: A Year of Challenge, A Year of
Change," Asian Survey 17:2 (February 1977), p. 153.

239
policy of treating the ethnic Chinese in Malaysia as "returned Overseas Chinese."

Largely due to these problems, Malaysian leaders had remained wary of

China's intentions. The visit by Chinese Vice-Premier Deng Xiaoping (who had just

emerged as China's paramount leader after the death of Mao and the purge of the

Gang of Four) to Malaysia in November 1978 as well as Tun Hussein's trip to China

in May 1979 did not alter this. In fact, Beijing's large-scale "punitive" war against

Vietnam in February-March 1979 further convinced Malaysian policymakers of

China inclination to use force in solving inter-state problems. They thus perceived

China rather than Vietnam as the greater threat to Southeast Asia. According to one

observer, the media event staged in January 1981 on the occasion of the return of

Musa Ahmad, the former chairman of the MCP, in which he openly condemned

China's role in supporting the movement, clearly demonstrated that the Malaysian

government "was not reluctant to seize the opportunity to reassert its conviction that

the PRC constitutes a long-term threat to Malaysia."101

Indeed, Malaysia's apprehension about China's long-term ambitious was

earlier evidenced by a statement jointly issued by Premier Hussein and Indonesian

President Suharto at a bilateral meeting in the Malaysian east coast town of Kuantan

in March 1980. In what was later known as the Kuantan Doctrine or Kuantan

Principle, the two countries declared that Vietnam must be freed from the influence of

both China and the Soviet Union. Amitav Acharya observes that the doctrine

highlighted "an intra-ASEAN divide" over the Indochina conflict, with Malaysia and

Indonesia on one side holding the view that "China posed the real long-term threat to

Southeast Asia, and that Vietnam could be a bulwark against Chinese expansionism",

100
Joseph Chinyong Liow, "Malaysia's Post-Cold War China Policy: A Reassessment," in Jun
Tsunekawa, The Rise of China: Responses from Southeast Asia and Japan (Tokyo: The National
Institute for Defense Studies, 2009), p. 53.

101
Tilman, The Enemy Beyond, p. 11.

240
and Singapore and Thailand, on the other side, insisting that the Soviet-backed

Vietnam was the main threat to regional peace and security.102

These political and security apprehensions notwithstanding, Malaysia's policy

towards China during this period was also driven by a growing desire on the part of

the BN government to gain economic benefits from China. This was evidenced by an

8-day economic mission led by the then Malaysian primary commodities minister

Musa Hitam to China in October 1976. The mission resulted in China's agreement to

purchase 5,000 tons of palm oil from Malaysia, which marked the first consignment
1 A"3

of the commodity between the two countries. It also brought home China's

assurance to increase its purchase of natural rubber and timber from Malaysia, as well

as a pledge to refrain from taking action that might adversely affect the price of tin in

the international market (of which Malaysia was the main exporter).104

China's economic reform and open-door policy in 1978 added further

momentum to Malaysia's economic pragmatism. Developing closer bilateral

economic cooperation was clearly one of the major goals underlying Tun Hussein's

1979 visit to China. During his trip, the premier remarked: "Trade and economic ties

have always been and should continue to be the strongest basis for the development

and strengthening of bilateral relations between the two countries. We should

therefore make further endeavor to extent our trade ties. As China moves ahead with

her modernization programs, and as Malaysia increases the pace of her

industrialization and production of primary products, there will be increasing

102
Acharya, Constructing a Security Community in Southeast Asia, p. 104.
103
Author's interview with Tun Musa Hitam, the former Malaysian Deputy Prime Minister, Kuala
Lumpur, February 8, 2010.

104
"Economic Mission to China: Press Statement by Dato Musa Hitam in Kuala Lumpur on 10
November 1976," in Bruce Gale, Musa Hitam: A Political Biography (Petaling Jaya: Eastern
Universities Press, 1982).

241
opportunities for this expansion." 105

Economic rationale continued to guide Malaysia's China policy after Mahathir

took over the country's reign in 1981. While the new premier had clearly placed more

emphasis on strengthening the country's economic ties with Japan under his Look

East Policy, 106 he had also sought to develop closer economic ties with other big

economies such as China, especially after the mid-1980s. Indeed, as shall be made

clear shortly, it was during the first decade of Mahathir's tenure as the country's

fourth premier that economic pragmatism was consolidated and made a central theme

in Malaysia-China relations. In part due to the new leader's desire to reduce

Malaysia's dependency on the West, and in part due to the prevailing view among

Malaysian policy elites that Deng's economic reform in the post-Mao China was a

trend that was unlikely to be reversed, the Malaysian government had since the mid-

1980s determined to tap into the potential of the giant neighbor's growing market.107

This determination was reinforced by the mid-1980s world economic recession,

which exposed Malaysia's vulnerabilities as a result of the country's heavy

dependency on the American and European markets. It was against this backdrop that

Mahathir made a historic visit to China in November 1985.

Mahathir's 1985 visit to China was in many ways a watershed moment for

Malaysia-China relations. The trip was significant not only because it was Mahathir's

first visit to the country (he subsequently made six more visits during the period

1993-2001), but more importantly it was also because the trip signaled Mahathir's

pragmatism in concentrating on economic matters as a way to manage what was then

105
Datuk Hussein Onn, speech at the banquet given in his honor in Beijing, May 3, 1979. In Foreign
Affairs Malaysia 12:2 (June 1979).
106
Khadijah Md. Khalid and Lee Poh Ping, Whither The Look East Policy (Bangi: Penerbit Universiti
Kebangsaan Malaysia, 2003).
107
Author's interview with Dato Abdul Majid Ahmad Khan, Puchong, November 4, 2009. Majid
served as the Political Counselor at the Malaysian Embassy in Beijing during Mahathir's historic visit
in 1985, and subsequently became the Malaysian Ambassador to China from 1998 to 2005. He is
currently the President of the Malaysia-China Friendship Association.

242
considered to be the "most sensitive foreign relationship" for Malaysia.108 This top-

down pragmatism cleared bureaucratic hurdles and smoothed the path for the signing

of a series of important documents that were aimed at facilitating bilateral trade and

investment. These documents were: the Avoidance of Double Taxation Agreement

(inked during Mahathir's 1985 trip), the Maritime Transport Agreement (signed in

September 1987), the Direct Trade Agreement (April 1988), the Investment

Guarantee Agreement (November 1988), and the Air Services Agreement (Mac

1989). In addition, the two governments also agreed in 1988 to establish the Joint

Committee on Economic and Trade Cooperation. These arrangements laid important

groundwork for subsequent economic cooperation between the two countries.

Significantly, these arrangements were made in conjunction with several policy

adjustments on the part of the Malaysian government. These included the 1988 moves

to abolish the requirement for Approved Permits to import Chinese products and to

abolish the 5% administrative charge, which were targeted at fostering greater direct

trade links between the two countries. 109

Nevertheless, despite the growing pragmatism to forge closer economic ties,

political vigilance remained. 110 Malaysian government's suspicions of China's

overseas Chinese policy were confirmed in 1984, when it discovered that Chinese

Malaysian were allowed to visit China clandestinely with special visas issued by the

Chinese authority in Hong Kong, and that they were treated like returning overseas

Chinese and looked after by the Commission for Overseas Chinese Affairs in

108
See James Clad, "An Affair of the Head," Far Eastern Economic Review, July 4, 1985, pp. 12-4.

109
Shee Poon Kim, The Political Economy of Mahathir's China Policy: Economic Cooperation,
Political and Strategic Ambivalence, IUJ Research Institute Working Paper 2004-6 (Tokyo: IUJ
Research Institute, 2004).
110
Stephen Leong, "Malaysia and the People's Republic of China in the 1980s: Political Vigilance and
Economic Pragmatism," Asian Survey 27:10 (October 1987), pp. 1109-26.

243
China. 111 The overlapping territorial claims in the South China Sea between China

and Malaysia (along with Vietnam, the Philippines, Brunei, and Taiwan) further

added to the bilateral mistrust. 112

Malaysian leaders' lingering suspicions about China were clearly evident in

Mahathir's speech to students and faculty at Qinghua University during his 1985 visit:

... we welcome the many assurances of your leaders that China will never seek
hegemony and will never do anything to harm us. We also note your assurances that
China's developing military capacity is purely for its own defence. We appreciate the
enormous burden of self-restraint and responsibility that this entails. I ask that you
understand us, if despite these assurances, some concerns linger on, for we are
extremely jealous of our sovereignty and trust does not come easily to us in view of
our past experiences. Our experiences with China have not entirely been free of
problems and it would take time and mutual efforts for us to put to rest some of the
things left over from history.113

Because of its lingering distrust of China, the Malaysian government had

continued to pursue a "managed and controlled" policy throughout the 1980s.114

Under this policy, which was designed to insulate the local Chinese from China's

influence and reduce the risk of subversion, all interactions between Malaysia and

China were subject to certain rules and controls. Not only were all visits to China

(personal or economic reasons) and all publications from China put under strict

security control, all economic and trade activities were also tightly monitored.115 For

instance, Malaysian businessmen who wanted to travel to the Canton Trade Fair and

participate in the trade shows organized by the Associated Chinese Chamber of

Commerce and Industry of Malaysia or the Kuala Lumpur-Selangor Chinese Chamber

111
ibid.

1,2
Ibid.

113
Dato Seri Dr Mahathir Mohamad, "Regional Co-operation: Challenges and Prospects," speech at the
Qing Hua University, Beijing, 22 November 1985. Available at
http://www.pmo.gov.my/ucapan/?m=p&p=mahathir&id=846

114
Chai Ching Hau, "Dasar Luar Malaysia Terhadap China: Era Dr Mahathir Mohamad [Malaysia's
Foreign Policy towards China: The Mahathir Mohamad Era]" (M.A. Thesis, National University of
Malaysia, 2000).

115
Ibid.

244
of Commerce and Industry (but led by PERNAS and the Ministry of International

Trade and Industry) had to seek approval from the Ministry of Interior and be

interviewed.116 Although the government eventually relaxed the measures in the late

1980s by lifting the restrictions that limited the visits of Malaysian businessmen to the

Canton Trade Fair and by issuing multiple exit permits that allowed Malaysian traders

to longer stay in China to facilitate Malaysian firms doing business in the country,

deep-seated political mistrust continued to characterize the Malaysia-China relations

throughout the 1980s. It was not until 1989 when the MCP signed a peace agreement

with the Malaysian government that genuine normalization was reached between

Malaysia and China, as we shall see in the next chapter.

Singapore's China Policy, 1976-1989:

Between Increasing Economic Imperative and Enduring Geopolitical Sensitivity

Singapore's foreign policy toward China during the period 1976-1989 was pushed by

a growing economic imperative of branching into China's vast potential market, but

pulled by a continuing geopolitical concern of keeping an arm's length relation with

Beijing. This ambiguity was made more complex after 1979, when developments in

Indochina led Singapore leaders to view China as an essential strategic counterweight

to check the Soviet-Vietnamese aggression in the region.

Under the People's Action Party (PAP)'s rule, economic imperatives have

always been a key driving force behind Singapore's China policy. As mentioned in

the previous chapter, as far back as the 1950s and 1960s, Singapore already

maintained and developed close bilateral economic relations with China. The launch

of China's open-door policy in 1978 further intensified the bilateral economic ties.

The two governments signed a trade agreement in December 1979, and established

116
Institute of Developing Economies - Japan External Trade Organization (IDE-JETRO) and Socio-
Economic and Environmental Research Institute (SERI), Trade, Investment & Economic Cooperation
between China and ASEAN: Case Study on Malaysia (Tokyo: IDE-JETRO and SERI, 2004), p. 15.

245
Commercial Representative Offices in 1981, which had the authority to issue visas in

each other's territory. 117 Singapore opened two offices in China (Beijing and

Shanghai), and China established one in Singapore.118 The PAP government's desire

to develop closer economic relations with China was further heightened after 1985,

when Singapore was hard hit by one of its worst recessions in post-war history. It was

against this backdrop that three bilateral economic agreements were signed in the

following years, namely: (a) investment protection (1985); (b) tourism (1986); and (c)

the avoidance of double tax (1986). These arrangements, like the case of Malaysia,

were aimed at facilitating greater economic cooperation with China.

According to Carl Trocki, after the mid-1980s the PAP government began to

see that it was time to restore Singapore's traditional trading ties with China. It began

to view the Singapore Chinese Chamber of Commerce and Industry (SCCCI), which

was made up mostly of the small and medium-sized enterprises (SMEs) run by ethnic

Chinese, as "Singapore's bridge to China." It hoped that the SCCCI would not only

enhance Singapore's trade and investment ties with China, but also serve as "a broker

between China and the world" because of the cultural entree that Singapore's Chinese

could offer, thereby making Singapore "a gateway to China" for European and

American businessmen. 119

The PAP government's move to encourage the ethnic Chinese SMEs to

establish and develop business connections with China, to a large extent, was a

departure from its earlier stance in the 1960s and 1970s during which it feared that

developing too close a relationship with China would run the risk of exposing the

117
Chan, "Singapore: Domestic Structure and Foreign Policy"; John Wong, The Political Economy of
China's Changing Relations with Southeast Asia (London: Macmillan Press, 1984).

118
Chan, "Singapore: Domestic Structure and Foreign Policy."

119
Carl A. Trocki, Singapore: Wealth, Power and the Culture of Control (London & New York:
Routledge, 2006), pp. 175-6.

246
island's Chinese educated masses to China's political influence, thus undermining its

nation-building efforts. This policy departure not only represented a shift in the

government's attitude toward the island's Chinese-educated groups, but more

fundamentally it reflected a deepening sense of nationhood in an environment of

"depoliticization and complete dominance of the PAP" in the late 1980s.120 These

domestic changes allowed the government to afford reviving Confucianism and

promoting mother tongue languages as "critical cultural ballast" to ensure that

Singapore would remain an economically modern yet culturally distinctive society in

the face of rapid Westernization. 121 Externally, the changes also allowed the

government to expand economic ties with China without having to worry about the

negative domestic political repercussions that might follow from this.

The geopolitical concerns of the need to keep a distance from Beijing and

avoid being seen as a "kinship country" of China, however, had remained unchanged.

In view of Singapore's Chinese-dominated demographic structure as well as China's

policies toward the "overseas Chinese" and the communist insurgencies in Southeast

Asia, the PAP leaders knew full well that any sign of closeness with China was bound

to invite suspicion from its immediate Malay-Muslim neighbors. In November 1978,

Lee Kuan Yew spoke candidly to the visiting Chinese Vice Premier Deng Xiaoping -

who attempted use his Southeast Asian trips to persuade the ASEAN leaders of the

need to form a united front against the Soviet Union and Vietnam - that because

China was exporting revolution to Southeast Asia, his ASEAN neighbors "wanted

Singapore to rally with them not against the Soviet Union but against China

120
Chan, "Singapore: Domestic Structure and Foreign Policy."

121
Eugene K.B. Tan, "The Multilingual State in Search of the Nation: The Language Policy and
Discourse in Singapore's Nation-Building," in Lee Hock Guan and Leo Suryadinata, e d s . Language,
Nation and Development in Southeast Asia (Singapore: ISEAS, 2007), pp. 74-117; Diane Mauzy and
Robert Milne, Singapore Politics under the People's Action Party (London & New York: Routledge,
2002), pp. 57-8.

247
[emphasis added]." 122 Lee recounted the following in his memoir:

There were no 'overseas Russians' in Southeast Asia leading communist insurgencies

supported by the Soviet government, as there were "overseas Chinese" encouraged
and supported by the Chinese Communist Party and government, posing threats to
Thailand, Malaysia, the Philippines and, to a lesser extent, Indonesia. Also, China
was openly asserting a special relationship with the overseas Chinese because of
blood ties, and was making direct appeals to their patriotism over the heads of the
governments of these countries of which they were citizens, urging them to return and
help China in its 'Four Modernizations.'123

In an attempt to leave Deng "in no doubt as to the visceral suspicions of its

neighbors Singapore faced", Lee stressed that "ASEAN governments regarded radio

broadcasts from China appealing directly to their ethnic Chinese as dangerous

subversion." 124 Lee was astonished when Deng abruptly broke his silence and asked:

"What do you want me to do?" Although Lee was surprised by Deng's question as he

"had never met a communist leader who was prepared to depart from his brief when

confronted with reality, much less ask what I wanted him to do", he nonetheless

replied:

Stop such radio broadcasts; stop such appeals. It will be better for the ethnic Chinese
in ASEAN if China does not underline their kinship and call upon their ethnic
empathy. The suspicion of the indigenous people will always be there, whether or not
China emphasizes these blood ties. But if China appeals to these blood ties so
blatantly, it must increase their suspicions. China must stop radio broadcasts from
south China by the Malayan and Indonesian Communist Parties.125

While Lee was highly critical of China's policies toward the ethnic Chinese

and the communist movements in Southeast Asia, he nonetheless saw China as a

positive factor in the Indochina conflict. Specifically, he saw China as a valuable

counterweight to contain Moscow-Hanoi expansionism and to force Vietnamese

122
Lee Kuan Yew, From Third World to First, p. 665.

123
Ibid., p. 664.
124
Ibid., p. 665.

125
Ibid., pp. 665-6.

248
troops out of Cambodia. 126 Unlike Malaysia and Indonesia which perceived China's

invasion of Vietnam as an act of aggression that posed a threat to Southeast Asia, and

unlike the Western media which regarded China's action as a failure, Lee took an

entirely different view. In his own words: "I believe it [China's punitive action]

changed the history of East Asia. The Vietnamese knew China would attack if they

went beyond Cambodia on to Thailand. The Soviet Union did not want to be caught

in a long-drawn-out war in a remote corner of Asia. They could afford a quick

decisive action against China, but the Chinese denied them this by declaring that their

military action was a 'punitive' action and was not intended to capture Vietnam." 127

Lee's positive assessment of China's punitive action, however, does not mean

that Singapore wanted China to play a bigger role in Indochina. While Singapore

leaders saw China as an indispensable factor in their minimum objective of forcing

the Vietnamese troops out of Cambodia and restoring the status quo ante in the

region, their maximum objective was to re-establish "a truly independent, neutral and

non-communist Cambodia" that would fall "neither under Vietnamese domination nor

into China's sphere of influence." 128 Peter Schier notes that from the perspective of

Singapore, the ideal outcome for the Indochina problem would be not only for

Vietnam to opt out of the Sino-Soviet conflict and "return to their wise policy of

even-handed relationship with great powers", but also to act as "a Southeast Asian

buffer against China." 129 In that regard, Singapore's strategic goal was not different

from that of Malaysia.

126
Obaid, "Foreign Policy," p. 295.

127
Lee Kuan Yew, From Third World to First, pp. 669-70.

128
Schier, "The Indochina Conflict from the Perspective of Singapore," p. 229.
129
Ibid.

249
 Conclusion

The discussion in this chapter indicates that, despite the commonalities in Malaysia

and Singapore's policy adjustments in the face of reduced Western commitments as

described above, there were important differences in their perceptions and actions vis-

a-vis the big powers. First, unlike Malaysia who moved to make rapprochement with

China by establishing diplomatic relations with the neighboring giant in May 1974,

Singapore had chosen to take a more cautious approach by declaring that it would

establish formal ties with Beijing only after all the other ASEAN states had done so.

Second, unlike Malaysia who saw regional neutralization as the best way to maintain

peace and security, Singapore had sought to put more emphasis on ensuring a

continued American involvement in the region. Third, after Vietnam's invasion of

Cambodia, whereas Singapore (and Thailand) had come to view China as an

important external factor in containing Vietnamese-Soviet expansionism, Malaysia -

despite its formal rapprochement with China - had continued to perceive Beijing and

not Hanoi as the largest long-term threat to Southeast Asia. Despite its desire to gain

economic benefits from China's growing market, the Malaysian government had

continued to pursue a "manage and control" policy throughout the 1980s that was

aimed at limiting the people-to-people interactions between the two countries.

It can be inferred from the discussion that such differences were chiefly a

function of elites' domestic legitimation in the two smaller states. While Malaysia's

China policy during this period was driven by its leaders' concerns to strike a balance

between a lingering political distrust and a growing economic pragmatism toward

Beijing, Singapore's China policy was motivated by a calculation on the part of the

ruling PAP elites to expand Singapore's economic ties with China without creating

any geopolitical liabilities to the island-state. Both were the result of a desire to

legitimize and strengthen their domestic authority to rule.

250
 Finally, it can also be inferred from this chapter that the alignment between the

ASEAN states and their dialogue partners during the Cambodian conflict does not

necessarily mean that ASEAN's response was one of classic balancing. This is

because notwithstanding their efforts to align strategically with the Western powers,

the ASEAN states did not place their entire bets in their partners. Rather, instead of

completely closing ranks with the West and completing confronting the Communist

powers, the smaller states had adopted a counteracting move by simultaneously

striving to develop a working relationship with the source of security concerns, in an

apparent attempt to offset the risk of uncertainty. Such a hedging approach has largely

persisted into the post-Cold War era, as we shall see more clearly in the course of the

following analyses in Chapters 7 and 8.

251
 CHAPTER 7

MALAYSIA'S CHINA POLICY,

1990-2010

"It is high time for us to stop seeing China through the lenses of threat and to fully
view China as the enormous opportunity that it is. The perception that China is a
threat is a popular one. Malaysia itself once nursed this view, but then those were the
days when the Communist Party of Malaya drew inspiration and support from the
Chinese Communist Party and when fears of a Chinese fifth column in Southeast
Asia were strong. To be sure, we must never be soft headed and naive. We must
always be realistic and ready. But times have changed dramatically, and Malaysia is
one of the countries that recognizes these changes. We no longer regard China as a
threat. We do not believe in feuds. We cannot allow the past to determine our future
forever. ... In my view, to perceive China as a threat and to fashion our security order
around this premise would not only be wrong policy, but it would also be a bad and
dangerous one. We need to fundamentally reassess our notions about the so-called
Chinese threat. ... Will China eventually have hegemonic ambitions? I don't really
know. Big powers cannot but cast big shadows over neighbors. How light or how
dark the shadows are depends not on just the power concerned but also on those
overshadowed."
Dr. Mahathir Mohamad, the fourth Prime Minister ofMalaysia
January 1995

"Malaysia's China policy has been a triumph of good diplomacy and good sense. Our
position was that of an undivided China, secure, prosperous, at peace with itself and
with the region, and this has remained undiminished all these years. What is more, I
believe that we blazed a trail for others to follow. Our China policy showed that if
you can look beyond your fears and inadequacies, and can think and act from
principled positions, rewards will follow."
Abdullah Ahmad Badawi, the fifth Prime Minister of Malaysia,
February 2004

"I recently visited China at the invitation of Premier Wen Jibao. The visit came 35
years to the day since my late father established diplomatic relations with China. But
I wasn't just retracing his footsteps. It was to cover new ground, to walk further and
faster to deepen and broaden our long standing relations. This, my official first visit
to a non-ASEAN country, was made because our relationship with China is
fundamental to our national interests, and because there are many mutual lessons to
be learnt and shared between our countries."
Najib Tun Razak, the sixth Prime Minister of Malaysia,
June 2009

This chapter examines the underlying factors shaping the evolution of Malaysia's

China policy in the post-Cold War era, under the successive leaderships of Mahathir

252
Mohamad, Abdullah Ahmad Badawi (2003-2009), and Najib Tun Razak (2009-

present). Building upon the Domestic Legitimation Model developed in Chapter 4, it

seeks to explain how and why Malaysian ruling elites - by responding to the changing

distribution of global power as well as the changing legitimation bases at the domestic

level - have opted for policies that can be described as "hedging" vis-a-vis China. The

policies are hedging in the sense that while the Malaysian elites have sought to forge

close relations with the rising China for maximizing economic, diplomatic, and

foreign affairs benefits that are deemed critical for their domestic legitimation efforts,

they have simultaneously adopted counteracting measures that are aimed at reducing

risks and preparing for contingencies, as a way to cope with the problems of power

asymmetry under the conditions of high-uncertainties and high stakes.

The evolution of Malaysia's China policy over the past five decades illustrates

how a previously hostile and mutually suspicious relationship has transformed into a

cordial political partnership in the post-Cold War era.1 As discussed in the previous

chapter, although Malaysia was the first ASEAN state to establish diplomatic ties

with the PRC at the height of the Cold War, up until the late 1980s Malaysia still

perceived China as the biggest and long-term threat.2 This was due not only to

China's continued support for the outlawed Malayan Communist Party (MCP, which

aimed at overthrowing the Kuala Lumpur government through violent means) even

after the establishment of diplomatic relations, but also to Beijing's Overseas Chinese

1
Stephen Leong, "Malaysia and the People's Republic of China in the 1980s: Political Vigilance and
Economic Pragmatism," Asian Survey 27:10 (October 1987), pp. 1109-26; Joseph Liow Chinyong,
"Malaysia-China Relations in the 1990s: The Maturing of a Partnership," Asian Survey 40:4
(July/August 2000), pp. 672-91; Abdul Razak Baginda, "Malaysian Perceptions of China: From
Hostility to Cordiality," in Herbert Yee and Ian Storey, e d s . The China Threat: Perceptions, Myths
and Reality (London: RoutledgeCurzon, 2002), pp. 227-47.

2
J. Saravanamuttu, The Dilemma of Independence: Two Decades of Malaysia's Foreign Policy, 1957-
1977 (Penang: Penerbit Universiti Sains Malaysia, 1983); Hari Singh, Malaysia and the Communist
World, 1968-81, Ph.D. Dissertation, La Trobe University, 1988.

253
policy and the conflicting territorial claims in the South China Sea.3 While the

government's growing desire during the mid-1980s economic recession to tap into the

enormous potential of China's market did result in Prime Minister Mahathir's well-

publicized visit to China in 1985 and the signing of a bilateral trade agreement in

1988, Malaysian elites' perceptions of China were still marked by a high level of

political distrust and vigilance well into the late 1980s.4 Consequently, Malaysia's

China policy throughout the Cold War period was highly vigilant, cautiously designed

to manage and control what was then considered to be the country's "most sensitive

foreign relationship." 5

Since the end of the Cold War, however, relations between the two countries

have undergone tremendous transformation, especially after the mid-1990s.6 As we

shall discuss below, it was during Mahathir's long reign that the bilateral relations had

taken a new direction, effectively turning a guarded rapprochement during the 1970s

and 1980s to a cordial partnership since the 1990s. This direction has been continued

and consolidated by his two successors - Abdullah Badawi and Najib Razak - who

had both chosen China as the first country outside ASEAN to visit after assuming

office. Under the three successive prime ministers, Malaysia-China relations have

over the decades gradually expanded from mainly economic links of the early period

3
J.N. Mak, "The Chinese Navy and the South China Sea: A Malaysian Assessment," Pacific Review
4:2(1991), pp. 150-61.
4
Leong, "Malaysia and the People's Republic of China in the 1980s"..

5
Chai Ching Hau, "Dasar Luar Malaysia Terhadap China: Era Dr Mahathir Mohamad [Malaysia's
Foreign Policy towards China: The Mahathir Mohamad's Era]" (M.A. Thesis, National University of
Malaysia, 2000); James Clad, "An Affair of the Head," Far Eastern Economic Review, July 4, 1985,
pp. 12-4.

6
Liow, "Malaysia-China Relations in the 1990s"; Nor Azizan Idris, "Etnisiti dan Ideologi dalam
Hubungan Malaysia-China," in Sity Daud and Zarina Othman, eds., Politik dan Keselamatan (Bangi:
Penerbit Universiti Kebangsaan Malaysia, 2005); Liao Xiaojian, "The Adjustments in Malaysia's
China Policy," in Tang Shiping et al, eds., Lengzhanhou Jinlin Guojia Duihua Zhengce Yanjie [A Study
of the Immediate Neighbors' China Policies after the Cold War] (Beijing: Shijie Zhishi Publisher,
2006), pp. 131-64; Joseph Chinyong Liow, "Malaysia's Post-Cold War China Policy: A
Reassessment," in Jun Tsunekawa, ed., The Rise of China: Responses from Southeast Asia and Japan,
NIDS Joint Research Series No. 4 (Tokyo: The National Institute for Defense Studies, 2009), pp. 47-
79.

254
into more comprehensive ties in the present day, which cover not only trade and

investment cooperation, but also political dialogue, foreign policy partnership,

functional collaboration, cultural exchange, as well as people-to-people interaction.

This chapter begins by tracing the domestic determinants of Malaysia's

foreign policy that have contributed to the transformation of its China policy in the

new era. It then analyzes the transformation by examining the external and internal

factors shaping the evolution of Malaysia's China policy in three specific phases: (i)

Phase 1 (1989-1996): "Pursuing Mutual Engagement"; (ii) Phase 2 (1997-2003):

"Deepening Political Trust"; and (iii) Phase 3 (2004- present): "Developing Strategic

Cooperation Relationship."

Domestic Determinants of Malaysia's Post-Cold War China Policy

What explains the shift in Malaysia's China policy from a guarded rapprochement

during the 1970s and 1980s to a cordial partnership in the post-Cold War era? As

discussed below, in addition to the structural forces stemming from the changing

distribution of power at the global and regional levels, which propelled the smaller

state to increasingly see China as a force to reckon with, Malaysia's China policy in

the new era is also a product of the ruling elite's domestic legitimation, a result

necessitated by the changing domestic political and socioeconomic conditions.

The Changing Contours of Domestic Legitimation

The onset and the eventual outcomes of the political turmoil in Malaysia during the

period 1987-1990 - which was sparked by the intense and extended power struggle

within the United Malays National Organization (UMNO), the dominant Malay

political party in the governing multi-ethnic coalition Barisan Nasional (BN, the

National Front) - reflected the changing sociopolitical realities and their resultant

255
changes in the domestic legitimation pathways in the post-1969 Malaysia.

After the May 13 racial riots that followed the electoral setback to the Alliance

(the predecessor of BN) coalition government in 1969 as mentioned in Chapter 6 (pp.

212-4), the legitimation pathways of the Malaysian elites had shifted from inter-ethnic

consociational bargaining (1957-1969) to a governing approach that can be described

as "Malay hegemonism with accommodationist elements."7 The approach privileged

the Malays' political "birthright" and economic "entitlements", while accommodating

the non-Malays' concern to preserve their economic and cultural space. Implemented

mainly through the pro-Malay affirmative New Economic Policy (NEP), the approach

had over the period 1971-1990 produced a growing Malay middle class, increased the

number of mostly UMNO-linked private Malay capitalists, and expanded the state-

owned enterprises, thereby buttressing the Malay economic base and political power

vis-a-vis other ethnic communities. 8

This changing socio-economic situation was accompanied by the parallel trend

of growing influence of Islam as a socio-political force since the 1970s. The latter,

which was attributed to the dakwah movements at the international and national levels

as well as the Iranian revolution in 1979, had the effect of intensifying the

longstanding legitimacy contestation between the nationalist UMNO and its arch

rival, the conservative Islamist PAS (Pan Islamic Party of Malaysia), which has

7
Zakaria Haji Ahmad, "Evolution and Development of the Political System in Malaysia," in Robert A.
Scalapino, Seizaburo Sato, and Jusof Wanandi, e d s , Asian Political Institutionalization (Berkeley:
Institute of East Asian Studies, University of California, 1986), p. 235; Stephen Chee; "Consociational
Political Leadership and Conflict Regulation in Malaysia," in Stephen Chee, e d . Leadership and
Security in Southeast Asia: Institutional Aspects (Singapore: Institute of Southeast Asian Studies,
1991); William Case, "Malaysia: Aspects and Audiences of Legitimacy," in Muthiah Alagappa, e d .
Political Legitimacy in Southeast Asia: The Quest for Moral Authority (Stanford: Stanford University
Press, 1995), pp. 69-107; In-won Hwang, Personalized Politics: the Malaysian State under Mahathir
(Singapore: Institute of Southeast Asian Studies, 2003).

8
Edmund Terence Gomez and Jomo K . S , Malaysia's Political Economy: Politics, Patronage and
Profits (Cambridge: Cambridge University Press, 1999); James V. Jesudason, Ethnicity and the
Economy: The State, Chinese Business andMultimationals in Malaysia (Singapore: Oxford University
Press, 1989).

256
demanded the creation of a Islamic state based on Syariah (Islamic law).9 In the early

1980s, as PAS appeared to have made inroads in using Islam as a rallying point to

mobilize and shore up its support among the Malay-Muslim electorate (all Malays are

defined as Muslims in the Malaysian Constitution), the UMNO-led government -

now under the leadership of Mahathir - had responded by incorporating the cause of

Islam as a focal element of its legitimation struggles.10 In the attempt to compete with

PAS in projecting itself as the standard-bearer of Islamic causes before the dominant

Malay-Muslim constituency, the Mahathir government began to pursue a state-

orchestrated Islamization policy. 11 In addition to implementing a series of Islamic

social and economic programs, the government also moved to co-opt influential

dakwah leaders - most notably Anwar Ibrahim, the charismatic head of the ABIM

(the Muslim Youth Movement of Malaysia).12 At the level of political discourse, the

Mahathir government also attempted to promote a "moderate", "modernist", and

"progressive" Islam deemed more appropriate for the multi-ethnic Malaysian society,

as opposed to the more "radical" and "extreme" Islamism purportedly associated with

PAS and other Islamic groups (such as the Darul Arqam movement that was banned

in 1994, and the militant cult Al-Ma'unah that was cracked down in 2000).13

The emerging socioeconomic and political forces unleashed by these twin-

trends of NEP-engineered modernization and state-sponsored Islamization - along

9
Farish A. Noor, "Blood, Sweat, and Jihad: The Radicalization of the Political Discourse of the Pan-
Malaysian Islamic Party (PAS) from 1982 Onwards," Contemporary Southeast Asia 25:2 (2003), pp.
200-32.
10
Kamarulnizam Abdullah, "National Security and Malay Unity: The Issue of Radical Religious
Elements in Malaysia," Contemporary Southeast Asia 21:2 (August 1999); Shanti Nair, Islam in
Malaysian Foreign Policy (London & New York: Routlegde, 1998).

11
Patricia Martinez, "The Islamic State or the State of Islam in Malaysia," Contemporary Southeast
Asia 23: 3 (December 2001), pp. 474-503.
12
R.S. Milne and Diane K. Mauzy, Malaysian Politics under Mahathir (London & New York:
Routlegde, 1999), pp. 85-9 & 144-5.

13
Nair, Islam in Malaysian Foreign Policy, Joseph Chinyong Liow, Piety and Politics: Islamism in
Contemporary Malaysia (New York: Oxford University Press, 2009).

257
with the associated growing activism of civil society organizations, professional

bodies, and opposition parties - have over the 1970s and 1980s gradually altered the

bases of domestic legitimation in the multi-ethnic country. Specifically, the products

and consequences (intended and otherwise) of the dual state-driven processes - i.e.

the growing educated Malay middle class (mainly civil servants, professionals, and

businesspersons), the expanding UMNO-linked Malay capitalists, the declining

influence of the Malaysian Chinese Association as the second largest party within the

ruling coalition, the burgeoning inter-ethnic elite business cooperation (mainly

between Chinese capitalists and the UMNO-linked firms and Malay businessmen),

the rising UMNO factionalism and money politics, and the increasing Islamization -

had over time ironically come to challenge the very political foundation of UMNO,

the architect responsible for initiating and advancing those state policies.14 This

became clear during the course of the political crisis in the late 1980s, which almost

removed Mahathir from his position as the president of UMNO and head of the

Malaysian government.

The crisis was sparked off by the intense UMNO factional conflict in 1987-88.

In the April 1987 party election, Mahathir as the incumbent president was challenged

by a faction led by Tengku Razaleigh Hamzah (the Trade and Industry Minister) and

Musa Hitam (Mahathir's former Deputy Prime Minister who resigned in 1986 over

"irreconcilable differences" with the premier). 15 The factional conflict was not just a

result of inter-elite rivalry, but also a product of the changing social composition of

UMNO in the NEP environment. The effects of both factors were transmitted,

14
Harold Crouch, Government and Society in Malaysia (New South Wales: Allen & Unwin, 1996);
Case, "Malaysia"; Gomez and Jomo, Malaysia's Political Economy, Lee Kam Hing and Heng Pek
Koon, "The Chinese in the Malaysian Political System," in Lee Kam Hing and Tan Chee-Beng, eds.
The Chinese in Malaysia (Shah Alam, Malaysia: Oxford University Press, 2000), pp. 194-227.

15
For a detailed account of the earlier factional conflicts within UMNO, see Shamsul A . B , "The
'Battle Royal': The UMNO Elections of 1987," in Mohammed Ayoob and Ng Chee Yuen, eds.
Southeast Asian Affairs 1988 (Singapore: Institute of Southeast Asian Studies, 1988).

258
amplified, and exaggerated by the mid-1980s economic recession. As observed by

Harold Crouch: "By the 1980s the educated middle class and NEP-produced

businesspeople were playing a major role in UMNO, and candidates spent huge sums

to ensure victory in party elections. While the Malaysian economy was growing in the

1970s and 1980s, UMNO was easily able to reward its business supporters. But when

the economy contracted in the mid-1980s, it became increasingly difficult to satisfy

all of them." 16 This observation is shared by Shamsul A.B., who notes that when the

economy suffered a prolonged recession, those who were adversely affected "became

bitter and frustrated and ultimately turned against those in power because they were

desperate, disenchanted, and disillusioned." 17

Many of those disenchanted forces - along with other dissidents inside the

party - rallied behind the Razaleigh-Musa faction (popularly known as "Team B"),

seeking to challenge Mahathir and his "Team A". The hard-fought election ended

with a narrow victory for Mahathir. The factional conflict, however, did not end there.

In 1988, shortly after the Malaysian court declared the UMNO election as null and

void and UMNO "an unlawful society" on technical grounds, Mahathir's group

quickly reestablished UMNO as "UMNO Baru" (New UMNO), whereas Razaleigh

and his supporters moved to found a new party called "Semangat 46" (Spirit of '46). 18

As the next general elections loomed closer, the struggle between the Mahathir

and Razaleigh factions soon escalated to the national level. Semangat 46 sought to

mobilize a broad-based opposition against Mahathir's government by forming two

parallel coalitions, i.e. one with the hard-line Malay-Muslim-based PAS and the other

with the socialist DAP (Democratic Action Party), whose political base was largely

16
Crouch, Government and Society in Malaysia, p. 115.
17
Shamsul, "The 'Battle Royal'," p. 174.

The name was to reflect the spirit which the party was founded in the year 1946.

259
non-Malay (mainly Chinese) lower middle class who were resentful of the BN

government's pro-Malay NEP policies. The opposition parties were not able to form a

single coalition vis-a-vis the ruling BN coalition chiefly due to the ideological

incompatibility between PAS and DAP. The former's proclaimed goal of establishing

an Islamic state in Malaysia (where Syariah law would be enforced) was unacceptable

to the latter, whose members were predominantly non-Muslims. By forming two

separate coalitions and making a broad electoral appeal to voters, Razaleigh and his

political allies in effect brought together a diverse group of opposition and dissident

forces - i.e. the hardcore PAS supporters (particularly in the rural heartland) who

advocated greater Islamization of the Malaysian society, the urban and rural non-

Malays who called for fairer socioeconomic policies and greater educational

opportunities, as well as the professional and civil-society organizations that

demanded greater democratic space - against Mahathir's BN government.

Although the 1990 general elections ended with BN's victory (attributed to,

among others, the strong economic recovery, Mahathir's astute political skills, and the

electoral advantages of the incumbent government), the results were the worst for

Mahathir since he came to power in 1981.19

The unprecedented strong electoral challenge presented by a broad-based

(albeit somewhat fragmented) opposition coalition, inter alia, clearly highlighted the

changing contours of domestic legitimation in the multi-ethnic country. In the light of

the growing intra-Malay division caused by the growing intra-elite struggles for

patronage within UMNO as well as the growing UMNO-PAS competition in the

politicization of Islam as noted above, the UMNO-led ruling coalition could no longer

depend on its traditional support from the Malay community as the primary basis of

its political power. According to Crouch:

19
Gordon Means, Malaysian Politics: The Second Generation (Singapore: Oxford University Press,
1991), pp. 183-203.

260
 In previous elections UMNO had enjoyed strong support from the Malay community
while the Chinese were divided between government and opposition. As a result,
UMNO normally won an overwhelming majority of the predominantly Malay
constituencies; and victories by non-Malay BN parties usually depended on Malay
support channeled to the BN through UMNO. But with UMNO split, the party for the
first time was depending on non-Malay, especially Chinese, votes in predominantly
Malay constituencies. In the overwhelmingly Malay seats, which had previously been
considered UMNO strongholds, the Chinese minority suddenly became very
important. ... As a consequence, the BN was forced to appeal to Chinese interests
and feelings.20

Against this backdrop, the Malaysian government began to take a more liberal

approach to ethnic Chinese educational and cultural activities. It not only doubled the

state funding for Chinese primary schools, but also allowed more Chinese cultural

elements in public performances. 21 Besides, the government also relaxed its policy on

travel to China in May 1989, by reducing the age limit for social visits from sixty

years to fifty, and reducing the age limit for tourists from fifty-five to thirty.22

In addition to highlighting the increasing electoral importance of Chinese

voters, the origins and outcomes of the 1980s political crisis also reflected the

increasing salience of economic performance as a source of political authority.

Economic performance was politically important for Mahathir's government

for two reasons. First, the rent-seeking nature of the NEP-based political economic

system meant that there existed a reciprocal relationship between the political elites

and the special interests (i.e. the UMNO-linked corporations and businesspersons),

with the former using their political positions to confer economic favors to the latter,

in exchange for the latter's monetary contributions that would be used to finance

political activities, both for the party and general elections.23 Such reciprocal

relationship required continuous economic growth, not least because negative

20
Crouch, Government and Society in Malaysia, p. 124.

21
Lee and Heng, "The Chinese in the Malaysian Political System," p. 220.
22
Crouch, Government and Society in Malaysia, pp. 124-125.

23
Gomez and Jomo, Malaysia's Political Economy.

261
economic performance would shrink the pool of patronage resources, which, in turn,

would intensify the competition among special interests, breed resentment towards the

political leadership, and exaggerate personality conflict at the elite level, as vividly

demonstrated by the 1987 UMNO crisis mentioned above. (A similar pattern repeated

itself a decade later, when the 1997-98 Asian Financial Crisis triggered yet another

intense political crisis within UMNO, as shall be discussed below.)

Sustained economic growth was politically significant for a second reason.

The changing state-society and intra-society relations in the 1970s and 1980s - a

product of the NEP-driven modernization and demographic change - had a profound

impact on the processes of interest articulation and interest aggregation in the multi-

ethnic developing society, which ultimately made economic growth (along with

greater democratic space) an increasingly important source of legitimacy that the

governing elites must deliver in order to retain their political relevance in the eyes of

the now more educated and more demanding constituencies. As mentioned, the NEP

programs had by the 1980s produced a sizeable Malay middle class. Over time, this

emerging middle class had gradually come to acquire interests of their own, which

might not coincide with those of the state.24 As observed by Hari Singh, the rise of the

Malay middle class reflected "not only a more confident and assertive sub-stratum of

society but also a new breed of economic entrepreneurs capable of competing with

[ethnic] Chinese", and they were becoming "less dependent on the state for protection

and less fearful of the Chinese economic threat." 25 Significantly, this trend had been

accompanied by an observable change in the ethnic composition of the Malaysian

population, in which the Bumiputera population had increased from 56 percent in

1970 to 60 percent in 1991, whereas the Chinese and Indians had declined from 34

24
Hari Singh, "Ethnic Conflict in Malaysia Revisited," Commonwealth and Comparative Politics 39:1
(March 2001), p. 55.

25
Ibid., p. 55.

262
percent and 9 percent in 1970 to 28 percent and 7 percent in 1991 respectively.26

Together, these socioeconomic transformations had slowly brought a subtle change to

inter-ethnic relations. That is, a nascent inter-ethnic link and multi-ethnic cooperation

emerged not only in trade unions, professional bodies, and non-governmental

organizations, but also among the Malay and non-Malay business groups.27

This did not mean that ethnic tension no longer existed; but it did mean that

the changing intra-society and state-society relations had helped to moderate racial

cleavages, and had broadened the scope of interest articulation from demanding for

protection of communal interests to demanding for greater economic opportunities,

better material well-being, fairer distribution of the fruits of the country's prosperity,

and more accountable democratic governance that generally transcended ethnic lines.

In the light of these trends, enlarging the size of the economic cake - rather

than competing for and disputing over the share of the economic cake among

different ethnic groups - had become a necessary pathway for the ruling BN elites to

secure the support of both Malays and non-Malay voters. This was more so given that

the UMNO-led government had received increased support from the ethnic Chinese

business community, who had benefited from the country's economic recovery, the

government's massive spending, and the inflows of foreign investments.28

To the BN elites, thus, a negative economic performance would not only risk

sparking a new round of inter-elite power struggle within the ruling party, but also

risk losing support from a wide range of constituencies, which included the UMNO-

26
Swee-Hock Saw, The Population of Malaysia (Singapore: Institute of Southeast Asian Studies,
2007), pp. 68-71; Chan Kok Eng and Tey Nai Peng, "Demographic Processes and Changes," in Lee
Kam Hing and Tan Chee-Beng, e d s . The Chinese in Malaysia (Shah Alam, Malaysia: Oxford
University Press, 2000), pp. 71-93.

27
Hari Singh, "Ethnic Conflict in Malaysia Revisited," p. 55; Abdul Rahman Embong, "The Culture
and Practice of Pluralism in Postcolonial Malaysia," in Robert Hefner, e d . The Politics of
Multiculturalism: Pluralism and Citizenship in Malaysia, Singapore, and Indonesia (Honolulu:
University of Hawa'i Press, 2001), p. 65.

28
Lee and Heng, "The Chinese in the Malaysian Political System," pp. 219-20.

263
linked special interest groups, the emergent Malay middle class, the multi-ethnic

grassroots and professional organizations, and the non-Malay businesspersons. The

political support of these constituencies became particularly crucial for BN, at a time

when UMNO was struggling to compete head-to-head with PAS in appealing to the

more conservative elements of the Malay-Muslim electorates. Against this backdrop,

a negative economic performance would not only constitute an economic risk to the

country, but it would also pose a political risk to the ruling coalition. Economic

security has thus become an integral part ofBN's regime security.

In sum, the origins and the eventual outcome of the chaotic political crisis during the

period 1987-1990 thus highlighted to the Mahathir government that, while UMNO's

traditional role as the protector of Malay prerogatives remained an important

pathway to mobilize support and claim the mantle of authority among the Malay

Muslim majority, this alone would not be a sufficient ground for the ruling elites to

retain their political supremacy. In the light of the enduring intra-Malay division as

resulted by the growing intra-elite struggle for patronage within UMNO as well as the

growing UMNO-PAS competition in the politicization of Islam as discussed above,

the ruling elites realized that they could no longer rely solely on their traditional

supporters from the Malay community, but had to garner the support of non-Malays

(and non-ethnic-based groups like civil society organizations) as well, in order to win

majority votes in the coming elections and retain their political power. Given the

changing state-society relations as well as the competing and growing demands of the

multiethnic constituencies, it was thus logical for the state elites to try broadening

their electoral appeals by ensuring the country's economic performance and by

embracing an all-inclusive nationalist vision for nation-building.

264
Vision 2020 and BN's Domestic Legitimation

This became clear when, on February 28, 1991 - i.e. four months after the 1990

general elections - Mahathir enunciated what became known as his Wawasan 2020 or

"Vision 2020", in which he sketched out the dual goals of economic development and

nation-building. In a landmark speech entitled "Malaysia: The Way Forward", the

premier outlined the path for Malaysia to attain the status of a "fully developed

country" by the year 2020, when the country's Gross Domestic Product (GDP) would

become eight times larger than that in 1990. The Vision, which was promoted as the

key pillar of the new National Development Policy (NDP) that would succeed the

NEP in mid-1991, stressed the centrality of an accelerated industrialization drive,

economic liberalization and further deregulation to transform Malaysia into an

advanced, affluent industrial nation.29 Significantly, the Vision also linked its

developmental goal with the need to establish one Bangsa Malaysia (a united

Malaysian nation). In the premier's own words:

There can be no folly developed Malaysia until we have finally overcome the nine
central strategic challenges that have confronted us from the moment of our birth as
an independent nation. The first of these is the challenge of establishing a united
Malaysian nation with a sense of common and shared destiny. This must be a nation
at peace with itself territorially and ethnically integrated, living in harmony and full
and fair partnership, made up of one Bangsa Malaysia with political loyalty and
dedication to the nation [emphasis added].30

Vision 2020 was central to BN's domestic legitimation in a number of ways.

First, the Vision's projected goals of enlarging the economic cake and establishing a

united nation were designed to serve the political purpose of broadening the ruling

29
Malaysian political scientist Khoo Boo Teik observes that Vision 2020 was a "culmination of
Mahathirism", in that its substance was mostly drawn from the core components of what he has termed
as "Mahathirist ideology", which included an evolving nationalism, a freer capitalism, a universalizing
Islam, and a scripted populism. See Khoo, Paradoxes of Mahathirism: An Intellectual Biography of
Mahathir Mohamad (Shah Alam: Oxford University Press, 1995), p. 329.

30
Mahathir Mohamad, "The Way Forward", a working paper presented at the inaugural meeting of the
Malaysian Business Council, Kuala Lumpur, February 28, 1991, pp. 2-3.

265
coalition's electoral appeal to both Malay and non-Malay constituencies. On the one

hand, Mahathir's government continued to protect Malay economic interest largely

by privatizing state assets and promoting Malay entrepreneurship.31 On the other

hand, in order to enhance its legitimacy among the non-Malay electorates, the

government also began to relax the NEP's rhetoric and practice through its successor

NDP, as well as adopt a more accommodative approach toward the non-Malays'

demands for greater educational and cultural space. According to William Case: by

striking this interethnic deal, which was "more integrated than 'the bargain'" in the

1950s-60s and "more balanced than the NEP" in the 1970s-80s, the UMNO-led
32

government's authority and legitimacy appeared to be made more comprehensive.

Second, the Vision's focus on transforming Malaysia into a developed nation

capable of "standing tall as others" was key to BN's effort to promote Malaysian (as

opposed to Malay) nationalism, that, in turn, was aimed at constructing a national

identity, promoting national unity, and encouraging national pride. These goals were

crucial to BN's governance functions of maintaining and improving racial harmony

(however delicate it might be), as a way to ensure domestic tranquility and avoid the

recurrence of the May Thirteenth like ethnic conflict.

Third and perhaps more importantly, Vision 2020 was central to BN's

domestic legitimation also because it was hoped to be an agenda that would enhance

Malaysia's "economic defense capabilities"33 vis-a-vis the undesirable external

economic forces, which had in the past repeatedly affected Malaysia's economic
31
Gomez and Jomo, Malaysia's Political Economy, esp. pp. 75-184.

32
Case, "Malaysia," p. 102.

33
Mahathir, "The Way Forward", February 28, 1991, p. 21. On another occasion in November 1991,
the premier remarks: "If Malaysia is to defend its independence, this country must have its own power.
What is meant is not military power although military power has a role. What is meant is economic
power and the ability to develop one's own country. Only if we do become a developed country can we
defend [ourselves] should trade sanctions and other non-military threats be launched at us." Mahathir
Mohamad, "Speech at the UMNO General Assembly, KL, 8 November 1991. Quoted in Khoo,
Paradoxes of Mahathirism, p. 340.

266
performance that in turn seriously affected BN's governing foundation. In as much as

economic performance had become an important source of political authority to BN,

the problem for the ruling elites was that the economic performance of Malaysia -

like that of all smaller economies which were highly dependent on international trade

- will always subject to a host of external economic forces that were simply beyond

the control of the governing elites. Such external forces included not only the cyclical

downturn in the world market, but also the "unfair practices" in the global economy.34

These external conditions, as discussed, presented enormous economic cum

political risks to the BN ruling elites, in that any sharp decline in global demands and

any major protectionist barrier in the major markets could adversely affect the

economic progress of the export-driven country, reduce the size of patronage pool,

raise dissatisfaction among special interest groups and the emergent middle class, as

well as escalate the inter-elite rivalry, thereby creating broad-based dissent and

opposition against the ruling elites as evidenced by the 1987-1990 political turmoil.

It was due to these reasons that Mahathir saw the rise of trading blocs and the

increased protectionism in the West in the early 1990s as a threat to his rule. His

concerns were vividly articulated in his "Malaysia: The Way Forward" speech, in

which he stressed the importance of developing adequate "economic defense

capabilities" for a smaller state like Malaysia:

To grow we have to export. Our domestic market is far too small. It is important to us
that free trade is maintained. The trend towards the formation of trading blocs will
damage our progress and we must oppose it. ... A country without adequate
economic defence capabilities and the ability to marshal influence and create
coalitions in the international economic arena is an economically defenceless nation
and an economically powerless state. This Malaysia cannot afford to be [emphasis
added].35

34
Mahathir Mohamad, "Globalization and What It Means to Small Nations," a speech delivered at the
Inaugural Lecture of the Prime Minister of Malaysia Fellowship Exchange Program, Kuala Lumpur,
July 24, 1996. In Mahathir Mohamad, Globalization and the New Realities (Subang Jaya, Malaysia:
Pelanduk Publications, 2002), pp. 219-31.

35
Mahathir, "The Way Forward", p. 21.

267
 Such an emphasis on economic defense capabilities unambiguously reflected

Mahathir's growing concerns over economic security. This of course was not just due

to the rising importance of economic performance for BN's domestic rule. Two other

major developments in the late 1980s also explain why the BN elites now placed

greater attention on economic security matters, rather than the traditional military

issues. These developments were: the end of the Cold War and the dissolution of the

MCP in 1989. While the former greatly reduced external military risks, the latter

significantly lessened the danger of military insurrection from within. The much

improved internal and external security environment, accordingly, enabled the BN

elites to place greater priority on economic security issues in the new era.

Vision 2020, hence, was Mahathir's response to the changing domestic and

external circumstances in the post-Cold War era. By simultaneously seeking to pursue

economic growth and an all-inclusive nationalist agenda, the Vision was aimed at

mitigating the multiple risks faced by BN elites in the new environment - i.e. the

political risks of losing support and domestic authority to rival elites, the economic

risks of exposing Malaysia to outside economic forces without adequate economic

defense capabilities, as well as the strategic risks of passively subjecting itself to

undue influence of the powerful nations.

Implications for Malaysia's Post-Cold War Foreign Policy Orientation

The changing contours of domestic legitimation as discussed above have had

profound implications for Malaysia's foreign policy orientations in the post-Cold War

era. They drove the Mahathir government (as well as the succeeding administrations

of Abdullah Badawi and Najib Razak) to pursue an external policy that sought to

enhance Malaysia's economic defense capabilities and maximize the country's

economic potentials, through a variety of initiatives that included the proposal of East

268
Asian Economic Group (EAEG), an effort to promote South-South cooperation, an

inclusive regional engagement approach, and the idea of "prosper thy neighbor."

Chiefly because of the growing importance of economic performance as an

inner legitimation pathway to BN, economic imperative became a key driving force

behind Malaysia's external policy under Mahathir. While economic motive was

present in the periods before Mahathir, it was generally subsumed under the wider

geopolitical and security considerations. A case in point was Tunku Abdul Rahman

and then Tun Razak's moves to develop economic ties with the socialist and

communist countries at the height of the Cold War period. It was only during

Mahathir's tenure - especially after the end of the East-West confrontation - that

economic imperative began to assume a greater role in driving Malaysia's foreign

policy. While making his Vision 2020 speech in February 1991, the premier declared

that "[in] international relations, the emphasis should be less on politics and ideology

but more on economic imperatives." 36

This has had profound ramifications on Malaysia's external outlook and

policies toward other countries near and far, including China and other big powers.

While the Mahathir government was determined to accrue trade and

investment benefits from foreign countries as a way to ensure Malaysia's continuing

economic growth, the leader nonetheless was well aware that the international trade

system in the era of globalization was never a level playing field. His speeches

throughout the 1990s reflected that he was particularly concerned and critical about

the problems of "fairness and justice" confronting the developing countries in the

globalized world, where, in the name of "free trade" and "liberalization", the weak

and small economies were forced to open up their markets to the developed

economies who, "despite all their globalization and liberalization rhetoric", refused to

36
Mahathir, "Malaysia: The Way Forward," p. 20.

269
open up their own agriculture market and refused to remove the barriers on those

products like textiles, clothing and footwear. 37

Mahathir's concerns about the West's protectionist and inward-looking

policies deepened in the wake of the emerging trading blocs in North America and

Europe. 38 It was about the same time that Australia was pushing for a cooperation

framework among the Asia Pacific economies with the U.S. in it, which eventually

took the form of the Asia Pacific Economic Cooperation (APEC). In the light of these

developments - along with the lack of progress on the Uruguay Round of the GATT

(General Agreement on Trade and Tariffs) negotiations - Mahathir judged that there

was a need "to have some type of format whereby the Asian economies would be able

to obtain a better deal in whatever 'new economic order' the powerful nations of the

West constructed." 39

It was against this backdrop that Mahathir mooted the EAEG proposal in

December 1990, through which he advocated a grouping among the East Asian

countries (namely the ASEAN states, China, Japan, and South Korea) in order to

better protect these regional economies' collective interests in the face of rising

protectionism in the West. In an interview with the author in April 2010, the leader

explained: "I felt that there was a need to balance the overwhelming influence of the

Western countries, particularly the United States. And I think if the East Asian

37
Mahathir Mohamad, "Globalisation and Its Impact on Developing Economies," in Globalisation and
the New Realities, pp. 39-51. The premier's critical view about the international trading system was to
a large extent his reaction to the problems faced by Malaysia in dealing with its trading partners in the
developed world. For instance, in the late 1980s, the volumes of some of Malaysia's key export items
like palm oil and textiles to the U.S. were declining chiefly because of U.S. subsidies, revised GATT
quotas and a strong campaign by the American Soybean Association against the health benefits of palm
oil. This was quickly followed by another bitter experience, when Sweden imposed quota restrictions
that barred the import of certain types of apparel from Malaysia. See Chandran Jeshurun, Malaysia:
Fifty Years of Diplomacy (Petaling Jaya, Malaysia: The Other Press, 2007), pp. 219-20.

38
Mahathir Mohamad, "ASEAN and the World Economy: The Challenge of Change," speech
delivered at the International Conference on ASEAN Countries and the World Economy in Bali,
Indonesia, March 4, 1991. In Hashim Makaruddin, ed., Reflections on ASEAN: Selected Speeches ofDr
Mahathir Mohamad (Subang Jaya, Malaysia: Pelanduk Publications, 2004), pp. 111-24.

39
Jeshurun, Malaysia: Fifty Years of Diplomacy, pp. 231-2.

270
countries were to work together, then we will be able to balance the influence of the

United States. That's why I suggested the East Asian Economic Grouping." 40

Elsewhere, Mahathir noted that this grouping was to "facilitate consultation

and consensus prior to negotiating with Europe or America or in multilateral fora

such as the GATT." 41 Two months later, in his Vision 2020 speech in February 1991,

Mahathir remarked: "Small though we [Malaysia] may be, we must strive to

influence the course of international trade. ... We must therefore play our part and not

passively accept the dictates of those powerful nations who may not even notice what

their decisions have done to us." 42 To do this, the leader stressed the need "to marshal

influence and create coalitions in the international economic arena."43 Considering

Wisma Putra (Malaysian Foreign Ministry)'s persistent efforts in pushing for East

Asian cooperation since the early 1990s, it seems reasonable to see EAEG as one of

the platforms that Mahathir had in mind to play such roles as marshaling influence

and creating coalitions, for the purpose of shaping the course of international trade.

Beyond EAEG, the economic imperative as spelt out by Vision 2020 also

influenced Malaysia's foreign policy in many other ways. Because the pursuit of a

sustained economic development necessarily requires a stable regional environment

and close regional cooperation, this called for an inclusive regional engagement

approach that was accommodative, consultative, and pragmatic in orientation. Hence

Malaysia's stance in: (a) advocating for an engagement policy toward both China and

Russia in the immediate post-Cold War period (by inviting and enmeshing the two

big powers into the ASEAN-based regional consultative processes since 1991); and

40
Author's interview with Tun Dr. Mahathir Mohamad, the former Prime Minister of Malaysia, Kuala
Lumpur, April 29, 2010.
41
Mahathir, Reflections on ASEAN, p. 122.

42
Mahathir, "Malaysia: The Way Forward," p. 21.

43
Ibid.

271
(b) pushing for the enlargement of ASEAN and the inclusion of Vietnam, Laos,

Cambodia, and Myanmar/Burma into the larger ASEAN family.

In addition, the imperatives of diversifying Malaysia's export markets and

increasing its trade and investment opportunities led Mahathir to expound a foreign

policy philosophy of "prosper thy neighbor." The premier explained that the principle

simply means "if you help your neighbor to prosper you will prosper along with it."44

He continued: "When countries are prosperous they become more stable ... and their

prosperity provides you with a market for your goods, with opportunities to invest

and to enrich yourself even as you create jobs and wealth for them. Poor neighbors

are a source of problem for everyone, for themselves and for you. Their problems

tend to spill over your borders and undermine your peace and prosperity."45 This

foreign policy philosophy must be understood together with a point he emphasized in

Vision 2020, i.e. the need to explore the non-traditional markets, specifically the

individually small markets but cumulatively big market of the developing Asian,

African and Latin American economies. 46 Together, these external outlooks have led

Malaysia to, among others: (a) pursue a high-profile "commercial and developmental

diplomacy"; 47 (b) place more emphasis on South-South cooperation; and (c) increase

its involvement in regional and sub-regional economic cooperation.

These emerging foreign policy orientations have underpinned and set the

context for Malaysia's post-Cold War China policy. This can be discussed along three

distinctive phases, as follows.

44
Mahathir Mohamad's speech at the Annual Seminar of the World Bank in Hong Kong, 20 September
1997. Quoted in Mirzan Mahathir and Fazil Irwan, "Malaysia's Role in Asian Regional Cooperation: A
Look at Foreign Policy Themes," Asia-Pacific Review 14:2 (2007), p. 103.

45
Ibid.

46
Mahathir, "Malaysia: The Way Forward", p. 14.

47
Karminder Singh Dhillon, Malaysian Foreign Policy in the Mahathir Era 1981-2003: Dilemmas of
Development (Singapore: NUS Press, 2009), pp. 249-64.

272
 Phase One (1989-1996):

Pursuing Mutual Engagement at the Bilateral and Regional Levels

As discussed in Chapter 6, despite the growing momentum to forge a closer economic

cooperation, the lack of political trust between the two governments had continued to

limit the development of Malaysia-China relations throughout the 1980s. A genuine

normalization of bilateral relations did not take place until 1989. In June that year,

soon after the Chinese authorities crushed the pro-democracy student demonstrations

centered on Beijing's Tiananmen Square, the Malaysian government stated that it

"respected China's sovereignty and would not comment on nor interfere in China's

domestic affairs." 48 It then dispatched an official mission to Beijing in July,

underscoring the point that Kuala Lumpur saw the Tiananmen incident as China's

own internal affair. The 30-member trade mission, which was led by the trade and

industry minister Rafidah Aziz, was the first official delegation from Southeast Asia

to China's capital in the wake of the incident.49 Then on December 2, 1989, Chin

Peng, the MCP leader who had been residing in China for years, signed a Peace

Accord with the Malaysian government in Hatyai, Thailand.50 The accord not only put

an end to the MCP's decades-long armed struggle against the Malaysian government,

but also eliminated a long-standing obstacle to Malaysia-China relations. In August

and September 1990, the Malaysian government lifted all restrictions on visits to

China, in effect terminating its long-held "managed and controlled" policy.

The removal of this major political barrier, coupled with the changing

48
See Abdul Majid Ahmad Khan, Wu Zongyu, and Emily Matthews, eds, A Reflection: 30 Years of
Malaysia-China Friendship (Beijing: Oops Studio, 2004), p. 69.

49
"Rafidah Says Trade with China to Grow," New Sunday Times, July 26, 1989, p. 15. Rafidah's trip
was followed by the visits of Thai Prime Minister and Deputy Prime Minister three months later, which
represented the highest level of foreign official delegations to Beijing after the Tiananmen incident.

50
It is believed that China had played a role in the agreement. Wang Gungwu, "China: 1989 in
Perspective," in Southeast Asian Affairs 1990 (Singapore: Institute of Southeast Asian Studies, 1990),
pp. 71-85, see p. 72.

273
distribution of power at the regional and global levels following the end of the Cold

War and the dissolution of the Soviet Union in the early 1990s, set the stage for a new

era in Malaysia-China relations. With the old problems now behind them, the two

countries began to reassess and readjust their relations.

In alluding to the new strategic reality in the aftermath of the dramatic

geopolitical changes at the structural level, Mahathir began to see China as an

emerging actor who would increasingly play a vital role in regional and global affairs

in the post-Cold War era. This reassessment might be attributed not only to China's

privileged position as the permanent member in the United Nations Security Council

(UNSC), but also to the prevailing view among Malaysian policy elites that China

"would eventually replace Japan as an economic leader in the region."51 In addition,

the fact that Malaysia and China saw eye-to-eye on many emerging issues in the new

era - most notably the Gulf crisis, the need for a new international economic order,

the Cambodian issue, and the South-South dialogue - might also have contributed to

the Malaysian leader's reassessment. In view of these changing external realities,

Malaysian leaders thus judged that it was imperative to develop close relations with

Beijing. The economic motivation for tapping into China's growing markets added

further impetus for Malaysia to engage the neighboring giant.52

When asked about his considerations in making the move to engage China and

enmesh the giant into the ASEAN activities during the early 1990s, Mahathir replied:

"My personal thinking is that, if China opens up and becomes like us, then it will be
beneficial for Malaysia-China relations as well as Southeast Asia-China relations. So
I think it is important that we show to the Chinese leaders that we are not against
them, even in the past we were against Communism and all that. We are not against

51
Allen Whiting noted that this insight was shared with him by "an informed official" in Kuala
Lumpur during one of his interviews in the mid-1990s. See his "ASEAN Eyes China: The Security
Dimension," Asian Survey 37:4 (April 1997), pp. 299-322, see p. 311.

52
After many years of imbalanced trade, Malaysia was able to turn its bilateral trade with China to its
favor since the late 1980s. See Fadil Hisham Abdullah, "Moving Into a New Era of Co-operation,"
New Straits Times, December 10, 1990, p. 18.

274
 them, and that if they join the community as such, then there is much to gain."53

Significantly, as Malaysia began to make concerted efforts to engage the

emerging actor, China on its part, driven by its good-neighborliness policy that was

aimed at countering the West's political pressures and breaking the economic

sanctions imposed on it after the Tiananmen incident, also showed its interest in

cultivating better relations with the "periphery countries", particularly the ASEAN

states.54 According to Chen Jie, the Chinese Communist Party (CCP)'s leaders were

appreciative of the fact that Southeast Asian governments did not condemn its act

outright, and that the ASEAN leaders had continued to make high-level visits to

China. The visits were politically significant for the embattled CCP government,

because they "showed to the world that China was not isolated, at least in its own

backyard." 55 Chen observes that ASEAN countries' reactions might have to do with a

lesson they learned from their experience in dealing with China in the 1960s: that is,

"an internationally isolated China could be a trouble-maker in the region, and they

would be the first to bear the brunt." 56 The ASEAN countries thus wanted China to be

integrated into, rather than isolated from, the established international system.

This convergence gave rise to a period of mutual engagement between China

and ASEAN countries, including Malaysia. In December 1990, Chinese Premier Li

Peng led a 49-member delegation on a four-day official goodwill visit to Malaysia. It

53
Author's interview with Tun Dr. Mahathir Mohamad, the former Prime Minister of Malaysia, Kuala
Lumpur, April 29, 2010.
54
Zhang Baijia, "China's Domestic Politics and Foreign Relations in the 1990s," Zhonggong Danshi
Yanjiu [CCP History Studies] 6 (2001), pp. 29-34; Joseph Y.S. Cheng, "China's ASEAN Policy in the
1990s: Pushing for Regional Multipolarity," Contemporary Southeast Asia 21:2 (August 1999), pp.
176-204, seep. 179.
55
Chen Jie, "Major Concerns in China's ASEAN Policy," in Chandran Jeshurun, e d , China, India,
Japan and the Security of Southeast Asia (Singapore: Institute of Southeast Asian Studies, 1993), p.
162.

56
Ibid, p. 163.

275
was at a banquet for the visiting Chinese Premier that Prime Minister Mahathir

proposed the idea of the East Asian Economic Grouping (EAEG), stating that

countries in the region should further strengthen their economic and market ties to

counter the growing economic blocs in the West, and that China ought to play an

important role in the formation of such a bloc for the protection of fair trade in the

world. 57 The leader also remarked that, given China's potentially powerful economy

and its integral role to the Asia Pacific region, "the possibility of China becoming a
CO

dialogue partnership of ASEAN" should not be dismissed.

Four months later, in April 1991, the Malaysian and Chinese foreign ministries

held the first bilateral consultative meeting in Kuala Lumpur. 59 In retrospect, this

meeting was crucial for the development of Malaysia-China relations, for it created a

mechanism that allows the senior officials of the two countries' foreign ministries to

meet regularly "for consultations on bilateral, regional and international issues of

mutual concern." 60 It thus serves as an essential platform for the two countries to

pursue mutual engagement in a regularized and institutionalized manner. The regular

bilateral interactions inside and outside the consultative mechanism over the years

have been instrumental in promoting better understanding and building confidence

among the senior officials of the two countries who not long ago still harbored mutual

suspicions of one another. In addition, the mutual engagement has also contributed to

closer collaboration that has ramifications beyond the bilateral relations. One example
57
"PM Calls for Asia Pacific Trade Bloc: China Can Play Vital Role, Says Mahathir," New Straits
Times, December 11, 1990, p. 1.

58
Ibid.

59
Since its inception in 1991, this mechanism of foreign policy consultation has been held in Malaysia
and China on a rotating basis. The second meeting was held in Beijing in 1993, the 3rd in Kuala
Lumpur. The consultative meeting was headed by the Secretary General of the Malaysian Foreign
Minister and his Chinese counterpart. Author's interview with a senior official of Wisma Putra
(Malaysian Foreign Ministry), Putrajaya, September 29, 2009.

60
Mohamad Sadik Bin Kethergany, "Malaysia's China Policy" (MA unpublished paper, Universiti
Kebangsaan Malaysia and Institute of Diplomacy and Foreign Relations, 2001), p. 23.

276
was Malaysia's effort - together with its ASEAN partners - to integrate China into

the ASEAN activities by making it a Dialogue Partner of the regional body.61

In July 1991, i.e. three months after the first consultative meeting between the

two countries' foreign ministries officials, Chinese Foreign Minister Qian Qichen was

invited by the Malaysian foreign minister Abdullah Ahmad Badawi to attend the

opening session of the 24th ASEAN Ministerial Meeting in Kuala Lumpur.62 Qian's

attendance at the meeting, during which he also held an informal talk with ASEAN

foreign ministers, marked the beginning of the ASEAN-China dialogue process 63 In

1992, China attended the ASEAN meeting in Manila in the capacity of the group's

consultative partner. In 1993, China was invited to the founding dinner of the ASEAN

Regional Forum (ARF) in Singapore. In 1994, China attended the first ARF meeting

in Bangkok. It also agreed to ASEAN's suggestion to embark on an annual

consultation on political and security issues.64 In 1995, the first ASEAN-China Senior

Officials Consultations at the vice foreign ministers level was held in Hangzhou,

61
In December 1990, Prime Minister Mahathir remarked at the welcoming banquet for the visiting
Chinese Premier Li Peng that China could be "a dialogue partner of ASEAN". After Li Peng's visit, the
Malaysian side followed up by asking the Chinese side if China was interested in the idea.
Subsequently in 1991, Chinese State Councilor and Foreign Minister Qian Qichen wrote to his
Malaysian counterpart Abdullah Ahmad Badawi (then the ASEAN Chairman), expressing China's
willingness to have dialogues with ASEAN. Author's interview with a senior official of the Chinese
Foreign Ministry, Beijing, February 2003.

62
Years later, in 1998, when Abdullah Badawi was asked by an Asiaweek journalist "what can China's
neighbors do to improve relations," the then Malaysian Foreign Minister responded in no ambiguous
terms: "Continue to engage China. It's proving to be effective. In 1991,1 invited Qian Qichen to the
ASEAN foreign ministers' meeting in Kuala Lumpur. Contacts were made. This went on until China
became part of the ARF. We cannot have a security arrangement in ASEAN that excludes it. The most
important thing is engagement, not containment." See Asiaweek, August 1, 1998.

63
Author's interview with Tun Abdullah Ahmad Badawi, the former Prime Minister of Malaysia,
Putrajaya, March 18, 2010.

64
In 1994, Brunei was the ASEAN Chairman. During the ARF's Senior Official Meeting (SOM) that
year, Pehin Lim Jock Seng talked to the then Chinese Assistant Foreign Minister Wang Yingfan,
suggesting a SOM-level consultation between China and ASEAN, in order to enhance the China-
ASEAN relations and to make preparation for the ASEAN-China (then 6+1) ministerial level meeting.
The ASEAN side expressed the hope that the first ASEAN-China SOM held in China. The Chinese
side agreed, and the first consultation was held in Hangzhou, China in 1995. Author's interview with a
senior official of the Chinese Foreign Ministry, Beijing, March 2003.

277
China. In 1996, China became ASEAN's dialogue partner.65

Looking back, these interactions were crucial as they constituted the ASEAN

countries' early efforts to engage China via the embryonic regional multilateral

forums (in spite of and because of the overlapping territorial claims in the South

China Sea),66 and also because they laid important institutional and political

foundation needed for the development of the nascent ASEAN-China cooperation in

the new era. While the evolution of the ASEAN-China cooperation since the 1990s

was more a product of interactive process and collective action than the work of any

single state, Malaysia's effort in the early 1990s as described above as well as its

capacity as the "Coordinating Country for ASEAN-China Dialogue" from 1996 to

1999 clearly had played a role in promoting a closer and more institutionalized

relations the Southeast Asian countries and their giant neighbor.67

Engagement at the bilateral level proceeded at an even faster pace, and with a

wider scope throughout the 1990s. Malaysian Yang Dipertuan Agong (the King)

Sultan Azlan Shah made the first state visit and the first royal visit to China in

September 1991. His visit was reciprocated promptly when Chinese President Yang

Shangkun made the first state visit to Malaysia in January 1992. In June the following

65
This was followed by the creation of the ASEAN-China Joint Cooperation Committee (ACJCC) in
February 1997, as well as China's attendance at the first informal ASEAN Plus Three (APT) Summit
and the first informal ASEAN-China Summit in Kuala Lumpur in July the same year. By then, the
ASEAN-China cooperation has evolved into a full-fledged, multi-level regional institution. On China's
participation on these ASEAN-based regional institutions, see Kuik Cheng-Chwee, "Multilateralism in
China's ASEAN Policy: Its Evolution, Characteristics, and Aspiration," Contemporary Southeast Asia
27: 1 (April 2005), pp. 102-22.

66
Jusuf Wanandi, "ASEAN's China Strategy: Towards Deeper Engagement," Survival 38:3 (Autumn
1996), pp. 117-128; Yong Deng, "Managing China's Hegemonic Ascension: Engagement from
Southeast Asia," The Journal of Strategic Studies 21:1 (March 1998), pp. 21-43.
67
The "Coordinating Country" arrangement, proposed by Indonesia in 1996, allows the foreign
minister of one ASEAN member to act as a coordinator for the accompanying senior officials from the
other ASEAN nations to meet with the minister of individual dialogue partner on annual basis. In 1996,
Malaysia was ASEAN's coordinating country for dialogues with China and Canada, Brunei the
coordinator for dialogue with Australia, Indonesia with the U.S, the Philippines with Korea, Singapore
with the European Union, Thailand with Japan, and Vietnam with New Zealand and Russia. See Badrul
Hisham Mahran, "Malaysia to Play Coordinator Role in Dialogue," New Straits Times, July 17,1996,
p. 22.

278
year, Mahathir led a 290-member delegation to China. The trip, which was the

premier's second visit to the country, resulted in the signing of some 30 agreements

on the establishment of joint ventures and other forms of bilateral cooperation. In less

than a year, i.e. in May 1994, Mahathir made another visit to China. This was quickly

followed by a seven-day official trip by his Deputy-cum-Finance Minister Anwar

Ibrahim to China three months later. In November the same year, Chinese President

Jiang Zemin, who emerged as China's leader in the post-Tiananmen era, paid a state

visit to Malaysia. Later, in August 1996, Mahathir made his fourth visit to China. The

number and frequency of these high-level visits, as illustrated in Table 7.1 below,

reflect the extent to which the leaders of the two countries were keen in engaging each

other in the post-Cold War era.

Table 7.1
High-level Visits between Malaysia and China, 1989-1996

When Who and where

July 1989 Malaysian Trade and Industry Minister Rafidah Aziz visited China
December 1990 Chinese Premier Li Peng visited Malaysia
September 1991 Malaysian Yang Dipertuan Agong (the King) Sultan Azlan Shah
made the first state visit and the first royal visit to China
January 1992 Chinese President Yang Shangkun made the first state visit to
Malaysia
June 1992 Malaysian Premier Mahathir made his second visit to China
August 1992 Malaysian Defense Minister Najib Razak visited China
August 1992 Chinese Vice Premier Yao Yilin visited Malaysia
October 1992 Foreign Minister Abdullah Ahmad Badawi visited China
May 1993 Chinese Defense Minister General Chi Haotian made his first visit
to Malaysia
July 1993 Chinese National People's Congress (NPC) Standing Committee
Chairman Qiao Shi visited Malaysia
May 1994 Malaysian Premier Mahathir made his third visit to China
August 1994 Malaysian Deputy Prime Minister cum Finance Minister Anwar
Ibrahim visited China
September 1994 Chinese Defense Minister Gen Chi Haotian made his second visit
to Malaysia
November 1994 Chinese President Jiang Zemin visited Malaysia
December 1995 Chairman of the National Committee of the Chinese People's
Political Consultative Conference (CPPCC) Li Ruihuan visited
Malaysia
August 1996 Malaysian Premier Mahathir made his fourth visit to China

279
 In addition to the economic imperatives of strengthening the bilateral trade

and investments links, another key factor driving the mutual engagement between

Malaysia and China throughout the 1990s was Mahathir's EAEG initiative, which he

first proposed in December 1990. The EAEG proposal was strongly opposed by the

U.S., and received only a lukewarm response from Japan, South Korea and other

ASEAN members, even after it was renamed the East Asian Economic Caucus

(EAEC). In due course, China stood out as the only major power who lent explicit

support to EAEC. 68 In July 1993, Chinese Foreign Minister Qian Qichen explicitly

expressed his government's support for the EAEC, describing the caucus as an

appropriate vehicle to spur economic cooperation among East Asian countries.69 In

August 1994, Chinese Premier Li Peng suggested to the visiting Malaysian Deputy

Prime Minister Anwar Ibrahim that "specific measures be taken to form the proposed

East Asian Economic Caucus", and said that "China would work to convince other

countries on why they needed to be members of the EAEC." 70 Why had China lent its

support for Mahathir's EAEC proposal? Joseph Liow offers an insightful explanation:

"A central motivation behind Mahathir's proposal and China's support was both
parties' desire to plot out an economic agenda for East Asia that was independent of
U.S. influence. Nevertheless, there was another consideration that drove the two
parties to cooperate on Kuala Lumpur's EAEC initiative. In the eyes of the leadership
in both capitals, APEC, which was East Asia's alternative economic order, appeared
to be oriented primarily around the swift liberalization of the region's national
economies. Further to that, Malaysian and Chinese leaders also viewed APEC as a
body designed to provide Washington with a gateway for the then-ailing U.S.
economy into the markets and economies of East Asia. The pace of liberalization
pushed by the U.S. in APEC would make heavy demands on the economies of
Malaysia and China, both of which although capitalist or capitalist-oriented, had
nevertheless adopted the state-driven corporatist model in plotting national economic
policies. Hence, the concern that such liberalization would impinge on UMNO and
the Communist Party of China's close control of their respective national economies

68
Stephen Leong, "The East Asian Economic Caucus (EAEC): 'Formalized' Regionalism Being
Denied," in Bjorn Hettne et al., eds., National Perspectives on the New Regionalism in the South, Vol.
3 (London: MacMillan, 2000), pp. 57-107.
69
K.P. Waran, Zulkifli Othman, and Mohamed Yusof Taib, "China Comes Out In Full Support of
EAEC Concept," New Straits Times, July 25, 1993, p. 2.

70
Ahmad A. Talib, "Anwar: China Trip Boost to Improving Relations," New Straits Times, September
1, 1994, p. 1.

280
 provided an additional impetus for cooperation via the EAEC initiative."71

Mutual engagement also proceeded vigorously at other levels and in other

domains throughout this period. For instance, Malaysian defense minister Najib

Razak and foreign minister Abdullah Badawi separately visited China in August and

October 1992. Najib's trip was the first visit by a Malaysian defense minister since

the establishment of diplomatic ties with China in 1974. The visit was reciprocated by

his Chinese counterpart General Chi Haotian in May 1993. Chi made his second visit

to Malaysia in September 1994, holding talks with his counterpart Najib. It was

during these talks that both sides agreed to exchange defense attaches, which led to

the establishment of Malaysian and Chinese military attache offices in Beijing and

Kuala Lumpur in October and November 1995, respectively. In addition, this period

also witnessed the signing of the Memorandum of Understanding on Cooperation in

Information in March 1992 as well as the signing of the Scientific and Technological

Agreement in July 1992.

Progress was also made at the people-to-people and party-to-party levels

during this period. The Malaysia-China Chamber of Commerce (MCCC) was created

in 1990. The Malaysia-China Friendship Association (MCFA) was established in

Kuala Lumpur in December 1992.72 The China-Malaysia Friendship Association

(CMFA) was founded in China in May 1993. The following year witnessed the

beginning of official exchanges between the ruling parties of the two countries, when

a BN delegation made a visit to China in September. A CCP delegation made a

71
Liow, "Malaysia-China Relations in the 1990s," p. 677.

72
The Malaysia-China Friendship Association was established in December 1992. It was headed by
national literary laureate Dr Usman Awang, A. Aziz Deraman as deputy chairman and Abdul Aziz
Ahmad, Lee Lam Thye and Dr M.K. Rajakumar as vice-chairmen. The secretary is Goh Hin San and
treasurer Tan Kai Hee. See "Friendship Assoiation to forge Closer Ties with China," New Straits
Times, December 31, 1992, p. 10

281
reciprocal visit to Malaysia in March 1996. This was followed by another visit by

CCP representatives, who attended UMNO's 50th anniversary celebrations in May the

same year. Linkages were also established between the think tanks of the two

countries. The government-linked Institute of Strategic and International Studies

(ISIS), for instance, organized the first Malaysia-China Forum in Kuala Lumpur in

January 1995, which was attended by researchers and academics from China.

It was at that forum that Mahathir made his landmark speech refuting the

"China threat" theory and stressing Malaysian government's benign view of the giant

neighbor:

"It is high time for us to stop seeing China through the lenses of threat and to fully
view China as the enormous opportunity that it is. The perception that China is a
threat is a popular one. Malaysia itself once nursed this view, but then those were the
days when the Communist Party of Malaya drew inspiration and support from the
Chinese Communist Party and when fears of a Chinese fifth column in Southeast
Asia were strong. To be sure, we must never be soft headed and naive. We must
always be realistic and ready. But times have changed dramatically, and Malaysia is
one of the countries that recognizes these changes. We no longer regard China as a
threat. We do not believe in feuds. We cannot allow the past to determine our future
forever. ... In my view, to perceive China as a threat and to fashion our security order
around this premise would not only be wrong policy, but it would also be a bad and
dangerous one. We need to fundamentally reassess our notions about the so-called
Chinese threat."73

The speech was landmark in that it reflected a fundamental reassessment on

the part of the Mahathir government about China. It was a clear departure from the

premier's 1985 speech in Beijing, in which he reminded his Chinese audience that

"historically small countries on the peripheries of a big and powerful state have

always had reason to be wary." (See Chapter 6, p. 204) Driven largely by this

strategic reassessment, Mahathir reiterated Malaysia's benign view of Beijing at

virtually every domestic and international gathering that had to do with Malaysia-

China relations, often quoting Chinese navigator and diplomat Zheng He's peaceful

73
Mahathir Mohamad, "Malaysia and China in the 21st Century: Prosperity through Cooperation," a
speech delivered at the International Trade and Investment Conference, Kuala Lumpur, January 23,
1995.

282
voyages to the Sultanate of Malacca in the 15th century. During the 1995-1996

Taiwan Strait Crisis when China's missile tests and military exercises off Taiwan in

the run-up to the island's presidential elections raised international tensions, Mahathir

had played down fears that China could exert military muscle in other regional

disputes: "That [the crisis] is entirely between China and Taiwan. I don't think we

should take that as an indicator that China is an aggressive nation and will solve all

problems through military means ... I don't think China's attitude towards Taiwan

would be similar to its attitude towards the Spratlys or other multiple claims that you

find in East Asia." 74

To Mahathir, the idea of a China threat was nothing more than a "self-

fulfilling prophecy". His remarks in 1997 offer a telling illustration: "Why should we

fear China? If you identify a country as your future enemy, it becomes your present

enemy - because then they will identify you as an enemy and there will be tension." 75

Mahathir's benign perception of China was significant in that it had a

profound top-down effect on Malaysia's China policy. As observed by scholars Lee

Poh Ping and Lee Kam Hing, Malaysia's much more sanguine outlook towards

Beijing in the new era was attributed to the role played by Mahathir, who effectively

abandoned the Chinese threat perception by generating a climate of positive opinion

and by overcoming any lingering bureaucratic and military resistance to a more

benign view of China in the country. 76

Indeed, throughout Mahathir's tenure, notwithstanding the lingering concerns

74
"Fears of Chinese Military Pressure over Regional Disputes Played Down," Manila Standard, March
27, 1996, p. 27.
75
"I am Still Here: Asiaweek's Complete Interview with Mahathir Mohamad," Asiaweek, May 9, 1997,
available at http://www.asiaweek.com/asiaweek/97/0509/cs3.html

76
See Lee Poh Ping and Lee Kam Hing, "Malaysia-China Relations: A Review," in Hou Kok Chung
and Yeoh Kok-Kheng, eds., Malaysia, Southeast Asia and the Emerging China: Political, Economic
and Cultural Perspectives (Kuala Lumpur: Institute of China Studies, University of Malaya, 2005), pp.
13-4.

283
within the Royal Malaysian Armed Forces (RMAF) circle about Chinese long term

intentions,77 there was no clear indication that Kuala Lumpur was pursuing any

internal or external balancing acts against Beijing. In an empirically rich study on

Malaysia-China relations, Joseph Liow suggests that Malaysia's defense

modernization program does not reflect a strategic priority that is targeted at China.78

While this observation is countered by Malaysian defense analyst Razak Baginda,

who notes that "Malaysian defence planners do take seriously the potential [China]

threat argument, as reflected in the defence procurement," the analyst also adds that it

remains a question "whether the military has used the potential threat argument to

justify its defence acquisition programme or whether it seriously believes the threat
79

from China is credible."

Even if one agrees that Malaysia's defense modernization program is not

developed mainly with China in mind, this does not in itself constitute strong

evidence that Kuala Lumpur does not intend to counter-check China militarily. As a

smaller state, Malaysia may have regarded alliance rather than armament as a more

reliable approach to counter-balance China's growing power. After all, Malaysia has

long maintained close security cooperation with the U.S., and has been a participant in

the Five-Power Defense Arrangement (FPDA) that involves the United Kingdom,

Australia, New Zealand and Singapore. 80 Under Mahathir's watch, the U.S.-

Malaysian security ties were upgraded and institutionalized in the 1984 BITAC

77
Bronson Percival observes that "[in] Malaysia, the one government institution that appears to harbor
apprehension about China as a long-term threat to the nation's security is the Ministry of Defense." See
his The Dragon Looks South: China and Southeast Asia in the New Century (Westport: Praeger
Security International, 2007), p. 58

78
Liow, "Malaysia-China Relations in the 1990s," pp. 682-3.

79
Razak Baginda, "Malaysian Perceptions of China," pp. 241-2.
80
Abdul Razak Abdul Aziz, Peraturan Pertahanan Lima Kuasa: Sikap Malaysia, UPSK Occasional
paper No. 2/99 (Bangi: Unit Pengajian Strategi dan Keselamatan, Universiti Kebangsaan Malaysia,
1999).

284
(Bilateral Training and Consultation) agreement, which allows the two countries to

conduct joint military exercises, naval ship visits, ship and aircraft repairs, as well as

to meet as often as twice a year to discuss training, logistics, and intelligence

exchange. 81 These arrangements, however, are at best manifestation of "indirect" and

not pure form of balancing, given that their current raison d'etre has more to do with

the need to cope with diffused strategic uncertainty, rather than a specifically targeted

source of threat. According to Amitav Acharya, Malaysia's existing military ties with

the West were created during the Cold War and therefore "may not be seen as a

response to the rise of Chinese power." 82 Although Malaysia and the U.S. signed the

Acquisition and Cross-Servicing Agreement in 1994, the agreement is not a military

alliance, as it involves mainly defense logistics cooperation and not mutual defense

commitment. As observed by Mak Joon Nam, given Mahathir's anti-Western rhetoric

and BN's domestic considerations, it would be politically difficult for Malaysia to be

seen to be involved in any military alliance with Western powers, especially the
83

U.S. Malaysian scholar Zakaria Haji Ahmad writes, "[in] Malaysian conceptions of

the future, there is no notion of the U.S. being a strategic partner to 'balance', counter

or neutralize China's 'big power' mentality and actions."

In sum, largely because of Mahathir's top-down benign perception of China in

adjusting to the changing strategic reality and changing contours of domestic

legitimation, mutual engagement was the central theme characterizing the Malaysia-
81
Mak Joon Nam, "Malaysian Defense and Security Cooperation: Coming Out of the Closet," in See
Seng Tan and Amitav Acharya, e d s , Asia Pacific Security Cooperation: National Interests and
Regional Order (London: M.E. Sharpe, 2004), pp. 148-149; Barry Wain, Malaysian Maverick:
Mahathir Mohamad in Turbulent Times (London: Palgrave Macmillan, 2009), p. 251.

82
Amitav Acharya, "Containment, Engagement, or Counter-Dominance? Malaysia's Response to the
Rise of China," in Alastair Iain Johnston and Robert Ross, e d s . Engaging China: The Management of
an Emerging Power (London: Routledge, 1999), p. 140.

83
Mak, "Malaysian Defense and Security Cooperation," p. 144.

84
Zakaria Haji Ahmad, "Malaysia," in Evelyn Goh, e d . Betwixt and Between: Southeast Asian
Strategic Relations with the U.S. and China, IDSS Monograph no. 7 (Singapore: Institute of Defense
and Strategic Studies, 2005), p. 59.

285
China relations throughout the first half of the 1990s.

Phase II (1997-2003):
Deepening Political Trust amid Growing Strategic Convergence

Over time, the increasing mutual engagement at both the bilateral and regional levels

as described above had the effect of promoting familiarity and deepening political

trust between the two governments. Such political trust was further enhanced during

the height of the 1997-98 East Asian financial crisis. China's policy of not

devaluating its currency, which helped avoid another round of regional economic

downturn, was seen by Mahathir and other regional leaders as a responsible act. In

1998, at the time when the economic crisis became entwined with elite rivalries and

escalated into a political crisis that culminated in the sacking and imprisonment of

Deputy Prime Minister Anwar, and at the time when the Mahathir government's

handling of the Anwar case caused the country's image to suffer greatly both at home

and abroad, President Jiang Zemin met with Mahathir on the sidelines of the APEC

meeting in Kuala Lumpur. This symbolic act firmly conveyed China's support for
85

Mahathir's leadership. In the eyes of the BN elites, Jiang's support was a sharp

contrast to the move by the U.S. Vice President A1 Gore, who openly praised Anwar

and his Reformasi movement. A1 Gore's speech was interpreted as an "intervention if

not outright meddling of a foreign power in Malaysia's domestic affairs."86

The increased political trust among the leaders of Malaysia and China has

gradually brought about qualitative change to the bilateral relations. By the second

half of the 1990s, the scope of the bilateral cooperation had expanded beyond the

traditional realm of trade and economic cooperation, to include functional

coordination, educational collaboration, socio-cultural exchange, and perhaps most

85
Liow, "Malaysia-China Relations in the 1990s," pp. 678-9.
86
Jeshurun, Malaysia: Fifty Years of Diplomacy, p. 293.

286
important of all, cooperation in foreign policy domains. Indeed, the increased bilateral

contacts and consultations have provided opportunities for the leaders of Malaysia

and China to realize that they share important common understanding over a host of

regional and global issues. These range from the cause of the developing world, the

debates over "Asian Values" and human rights, the principles of sovereignty and non-

interference, as well as a shared preference for a multipolar international order in Asia

Pacific. The congruence of interests between Malaysia and China in these areas has

led them to support each other's position at various international forums. 87 Jurgen

Haacke thus observes that politically, China has regarded Malaysia "as something of a

soulmate in international politics and regional affairs." 88

Significantly, this growing foreign policy reciprocity has also been

accompanied by a growing strategic convergence between the two countries over the

East Asian cooperation. In part due to Beijing's international clout and in part due to

the shared worldview between the leaders of two countries, Malaysia has adopted a

limited-bandwagoning approach towards China by viewing Beijing as an important

source of support in its efforts to push for the goal of fostering closer cooperation

among the East Asian economies. The goal can be traced back to Mahathir's EAEG

proposal in 1990 noted above. Although Malaysia failed to materialize the

EAEG/EAEC idea due to the strong opposition and cool response from other regional

countries as discussed earlier, the 1997 East Asian financial crisis provided Kuala

Lumpur an opportunity to push through its goal of creating a consultative forum for

the East Asian economies to promote their collective interests on an institutionalized

basis. Wisma Putra, the Malaysian Foreign Ministry took the lead in lobbying for and

87
Liow, "Malaysia-China Relations in the 1990s," pp. 679-80.

88
Jurgen Haacke, "The Significance of Beijing's Bilateral Relations: Looking 'Below' the Regional
Level in China-ASEAN Ties," in Ho Khai Leong and Samuel C. Y. Ku, eds, China and Southeast
Asia: Global Changes and Regional Challenges (Singapore: Institute of Southeast Asian Studies,
2005), p. 131.

287
getting the leaders of China, Japan, South Korea and ASEAN countries to attend an

informal summit meeting in Kuala Lumpur. 89 It was during that meeting that Chinese

leader responded to the pleas made by the ASEAN leaders and pledged not to revalue

its currency. 90 The informal summit meeting subsequently evolved as the ASEAN

Plus Three (APT) process. According to Thomas Moore, as the APT progressed, it

became apparent that Beijing's support for the institution was also growing stronger.

In November 2001, in his speech at the APT Summit in Brunei, Premier Zhu Rongji

identified APT as "the main channel of East Asia cooperation", underscoring its

importance relative to other regional institutions.91 This growing convergence

provided increasing impetus for further cooperation between the Chinese and

Malaysian governments. In 2002, in an effort to further institutionalize the APT,

Malaysia lobbied for the creation of an "APT Secretariat" in Kuala Lumpur.92 This

effort, however, was strongly opposed by some ASEAN members, but firmly

supported by Beijing.

Beijing's move to support Kuala Lumpur's effort to promote East Asian

regionalism, of course, was driven less by bilateral considerations than by a larger

strategic goal of using regionalism to hedge against the risks of possible containment

of China by the U.S., especially in the wake of the deteriorating Sino-American

relations after the NATO bombing of China's Embassy in Belgrade.93 It was against

89
Author's interview with Ambassador Tan Sri Abdul Kadir Mohamad, the former Secretary-General
of the Malaysian Foreign Ministry, Kuala Lumpur, February 16, 2010. See also Abdul Kadir
Mohamad, "Abdullah Ahmad Badawi and Malaysian Diplomacy," in Hasmy Agam, ed., Abdullah
Ahmad Badawi, IDFR Diplomatic Profile Series (Kuala Lumpur: Institute of Diplomacy and Foreign
Relations, 2009), p. 15.
90
Author's interview with Tun Abdullah Ahmad Badawi, the former Prime Minister of Malaysia,
Putrajaya, March 18, 2010.
91
Thomas G. Moore, "China's International Relations: The Economic Dimension," in Samuel S. Kim,
ed., The International Relations of Northeast Asia (Lanham, Maryland: Rowman & Littlefield, 2004),
p. 118.

92
Ashraf Abdullah, "KL To Give RM38m for Secretariat," New Straits Times, June 6, 2002.

93
Joseph Y.S. Cheng, "Sino-ASEAN Relations in the Early Twenty-first Century," Contemporary

288
this backdrop that Beijing stepped up its efforts to further engage in regional

cooperation and strengthen its relations with regional states, including Malaysia.

During the period 1999-2000, China made efforts to approach one ASEAN country

after another to win support for the idea of signing a political statement on the future

development of bilateral ties. 94 On May 31, 1999, the Malaysian and Chinese

governments signed a joint statement on "Framework for Future Bilateral

Cooperation", in which the two sides agreed to work together in the new century to

bring about an all-directional relationship based on mutual trust and support.

Chiefly because of their convergence of interests in foreign policy and

economic realms, the Malaysian and Chinese governments have carefully prevented

their overlapping claims over the Spratly islands in the South China Sea area from

becoming a barrier to the development of bilateral relations.

Ever since Malaysia asserted its claim to Spratlys in 1979,95 its defense

planners have been apprehensive of China's intentions in the area, especially after

China's promulgation of the law on the territorial sea in 1992 and the Philippine-

China standoff over the Mischief Reef in 1995. Despite these concerns, however,

Malaysia under Mahathir clearly did not want the dispute to impede the goal of

promoting closer political and economic ties with China. This became apparent after

the mid-1990s. In October 1995, for instance, Malaysia and China reached a

consensus rejecting "any form of outside interference or mediation" in the dispute.96

In May 1999, they signed a Joint Statement and agreed "to promote the settlement of

Southeast Asia 23:3 (December 2001), p. 432; David M. Lampton, Same Bed Different Dreams:
Managing U.S.-China Relations, 1989-2000 (Berkeley: University of California Press, 2001); Thomas
J. Christensen, "Fostering Stability or Creating a Monster? The Rise of China and U.S. Policy toward
East Asia," International Security 31:1 (Summer 2006), pp. 81-126.

94
Haacke, "The Significance of Beijing's Bilateral Relations."
95
Lee Lai To, China and the South China Sea Dialogues (Westport, CT: Praeger, 1999).

96
Liow, "Malaysia-China Relations in the 1990s," p. 687.

289
disputes through bilateral friendly consultations and negotiations."97 In July the same

year, Malaysia opposed Filipino's request to discuss the dispute at ARF, echoing

China's position that the issue "should not be discussed at a multilateral forum." 98 In

August, while Manila protested vehemently over Malaysia's construction of structures

on Terumbu Siput and Terumbu Peninjau, China's response was low-key.

Considering that the Malaysian Foreign Minister was in Beijing just prior to the

contested construction took place, "it is a matter of conjecture," a well-informed

Malaysian analyst writes, whether the minister was "actually dispatched to Beijing in

order to 'explain' the latest development over Malaysia's position."99

Malaysia's moves, of course, were not so much about accommodating China's

position, but more about cashing in on its like-minded views with the power for

promoting its own interests on South China Sea, namely defending territory and

acquiring economic value of maritime resources. Each of these interests is central to

the BN government's domestic legitimation efforts. According to Joseph Liow, given

that Malaysia's claimed territory on South China Sea lies furthest from China, this has

kept both countries "from actual conflict over their respective claims and in turn has

facilitated easier bilateral cooperation." This is further aided by the fact that both

countries have similarly preferred "preserving the status quo" in the dispute (i.e.

seizing the opportunity of occupying unoccupied features before the commencement

of a regional code of conduct), because such an act was then considered "a tacitly

accepted norm" and "would at best be nominally opposed [by other claimants] at a

diplomatic level." 100 In explaining the timing of Malaysia's occupation, Christopher

97
Joint Statement between the Government of Malaysia and the Government of the People's Republic
of China on Framework for Future Bilateral Cooperation, 31 May 1999.
98
Leszek Buszynski, "ASEAN, the Declaration on Conduct, and the South China Sea," Contemporary
Southeast Asia 25:3 (2003), p. 352; Liow, "Malaysia-China Relations in the 1990s," p. 687.

99
Razak, "Malaysian Perceptions of China," p. 244.
100
Liow, "Malaysia-China Relations in the 1990s," pp. 688-9.

290
Chung notes that Kuala Lumpur's pre-emption "would result in a fait accompli before

the detailed negotiation of the code [of conduct] commenced [by the ASEAN-China

SOM working group in the coming year]", and would thereby enable Malaysia "to

defend itself against accusations that it had violated the code of conduct."101

In 2002, at an ASEAN-China working group meeting on a Code of Conduct

for the South China Sea, Malaysia advocated that if a legal binding code of conduct

was not feasible at that stage because of a lack of consensus, then ASEAN countries

and China should at least try to come out with an alternative, declarative "political"

document in order to "provide the right signal" to the outside world that ASEAN and

China were able to achieve an agreement after three years of discussion.102 Malaysia

further argued that such an alternative outcome was important as a confidence

building measure, in line with ASEAN's step-by-step approach that allowed the

countries to work towards a Code of Conduct on the basis of the framework. 103 These

arguments played a role in the eventual signing of the Declaration on the Conduct of

Parties in the South China Sea (DoC) between China and ASEAN countries in

November that year. Subsequently, Malaysia encouraged and welcomed China's

accession to ASEAN's non-aggression pact, i.e. the Treaty of Amity and Cooperation

(TAC) in 2003. These documents (DoC and TAC) have helped to reduce tension and

the possibility of conflict in the South China Sea area.

Largely because of the imperatives of economic performance to BN's

domestic legitimation effort as discussed above, Malaysia's China policy during the

post-Cold War era has persistently been driven by a policy of "economic-

101
Christopher Chung, The Spratly Islands Dispute: Decision Units and Domestic Politics (Ph.D.
Thesis, University o f N e w South Wales, 2004), p. 127 & p. 157.

102
Author's interview with Ambassador Tan Sri Ahmad Fuzi Abdul Razak, the former Secretary-
General of the Malaysian Foreign Ministry, Kuala Lumpur, August 8, 2008.

103
Ibid.

291
pragmatism", aimed at maximizing economic benefits from the neighboring giant's

growing prosperity. Such a policy is best illustrated by Mahathir's high-level visits to

China, which were always accompanied by big business delegations and resulting in

the signing of many lucrative joint-venture projects' memoranda of understanding.

Throughout the Mahathir years, Malaysia's trade with China had increased

tremendously. 104 Bilateral trade has climbed from just US$307 million in 1982 to

US$1.4 billion in 1992 and to US$14 billion in 2002.

Significantly, during this period the scope of traded products has expanded

from traditional primary commodities (rubber, palm oil, and petroleum) to a wide

range of manufactured goods, which include machinery, transport equipment and

electronic products. A study conducted by Kwek and Tham reveals that, while

Malaysia's exports of palm oil to China has grown progressively over the years, the

share of palm oil in the total exports to China dropped from 37.7 per cent to 16.5 per

cent for the period 1994-2004. Over the same period, the export of electrical and

electronic products increased from 3.3 per cent to 39.5 per cent, and chemical and

chemical products grew from 1.3 to 12.2 per cent.105 At about the same time,

electrical and electronic products also constituted as much as 39 per cent of the total

manufacturing goods imported from China in 2003, whereas chemical and chemical

products contributed another 11.1 per cent of the total imports from China.106 These

figures indicate that there is a significant shift in the pattern of trade, and that intra-

industry trade in components is becoming a major part of the two-way commercial

links. Since 2001, in part because of the largely complementarily industrial structure

104
Shee Poon Kim, The Political Economy of Mahathir's China Policy: Economic Cooperation,
Political and Strategic Ambivalence, IUJ Research Institute Working Paper 2004-6 (Tokyo:
International University of Japan, 2004).
105
Kian-Teng Kwek and Siew-Yean Tham, "Trade between Malaysia and China: Opportunities and
Challenges for Growth," in Emile Kok-Kheng Yeoh and Evelyn Devadason, eds., Emerging Trading
Nation in An Integrating World: Global Impacts and Domestic Challenges of China's Economic
Reform (Kuala Lumpur: Institute of China Studies, University of Malaya, 2007), pp. 123-37.

106
Ibid.

292
between the two countries, and in part because of China's rapid growth and greater

liberalization after its accession to the World Trade Organization (WTO), bilateral

trade has grown even faster, making China the fourth largest trading partner of

Malaysia after the U.S., Japan, and Singapore. In 2002 and 2003, Malaysia overtook

Singapore as China's largest trading partner in the ASEAN region.

Beyond trade, the Malaysian government also sought to strengthen bilateral

economic cooperation in other areas. In April 2002, during Vice-President Hu Jintao's

visit to Malaysia, the two governments agreed to form the Malaysia-China Business

Council further enhancing trade and investment. Earlier, in December 2000, Bank of

China reopened its office in Kuala Lumpur, and in April 2001, Malayan Banking

Berhad, Malaysia's leading bank, opened a branch in Shanghai. In October 2002, the

two central banks signed an agreement on bilateral exchange of currencies.

The period towards the end of the Mahathir years also saw a remarkable

increase in people-to-people ties. Ever since the government lifted the restrictions on

social visits to China in the late 1980s as mentioned above, the people-to-people

interactions and socio-cultural exchanges between the two countries have increased

significantly. At the turn of the new century, while China was increasingly becoming

an important destination for Malaysian visitors, there was also a steady rise in the

number of Chinese tourists to Malaysia. Government statistics show that over 550,000

Chinese visitors visited Malaysia in 2002. 107 Besides tourism, the two countries have

also cooperated in the field of education. According to Abdul Majid Khan, a former

Malaysian Ambassador to Beijing who is presently the president of the Malaysia-

China Friendship Association (MCFA), the bilateral cooperation in education

involves numerous programs for the exchange of academic staff, teachers, experts and

students, mutual assistance in technical and vocational education, as well as

107
"Getting More Visitors from China," New Straits Times, January 30, 2004.

293
scholarship schemes for further education.108 There were more than 10,000 Mainland

Chinese students studying in Malaysian institutions of higher learning, making them

the second largest groups of foreign students in the country, after Indonesians. The

MCFA and the Chinese-Malaysian Friendship Association have been playing

important role in promoting friendly relations between the two countries. The people-

to-people interactions have increased in tandem with the increasing functional

collaboration between government agencies in other areas, ranging from science and

technology, language and cultural promotion, to health, sports, and aviation.

The net effect of the above developments was that, by the time Mahathir

retired from office in 2003, Malaysia's relations with China had transformed into a

cordial and more comprehensive relation. The bilateral relations were described by

both sides as the best in its history, with a high level of political trust between the

leaders of the two countries.

Phase III (2004-Present):

Developing Strategic Cooperation Relationship

Malaysia's relations with China were pushed to new heights under the premiership of

Abdullah Ahmad Badawi, who succeeded Mahathir on October 31, 2003. One month

before becoming the country's fifth Prime Minister, Abdullah declared that 2004

would be a Malaysia-China Friendship Year to commemorate the 30th anniversary of

diplomatic ties and the 600th anniversary of the travels of Admiral Zheng He (Cheng

Ho), who initiated the first official contact between China and the Malacca Sultanate.

On May 27, 2004, less than seven months after assuming office, Abdullah led the

largest official delegation to China to mark the 30th anniversary of diplomatic ties.

The delegation consisted of a third of his Cabinet, three Chief Ministers, and over 500

businessmen. The fact that Abdullah had chosen to visit China as the first country

108
Abdul Majid Khan, "China and Malaysia," China Daily, May 28, 2004.

294
outside ASEAN after taking office was a clear testimony to the importance he

attached to the bilateral relations.

Under Abdullah's six-year tenure, Malaysia-China relations reached a new

level, with closer cooperation in various areas including the economy, foreign policy,

education, tourism, agriculture, health, and defense.

During this period, Malaysia's bilateral trade with China - now the country's

fourth largest trading partner - had grown at a faster rate than that with the U.S. and

Japan, the country's two traditional major trading partners. In 2008, Malaysia-China

bilateral trade reached US$53 billion, two years ahead of the target of US$50 billion

set by the leaders of the two countries. Malaysia again became China's biggest trading

partner in ASEAN (the first time was in 2002 and 2003).

Beyond trade, the two countries have also enjoyed close investment ties,

although it was still relatively low as compared to Sino-Singapore investment links.

While Malaysia has invested more in China than vice versa, China's investment in

Malaysia has been on a steady rise over the past decade. According to Chin Yee

Whah, Malaysia's investment has been led by the ethnic Chinese business

community, which includes conglomerates, individual entrepreneurs, as well as small

and medium enterprises. The scope of their investment ranges from small to big-scale

manufacturing, construction, property investment, banking, retail, forwarding and

education. 109 In recent years, in part because of the government encouragement, in

part because of China's further opening up after its WTO accession, and in part

because of the cooperation between Malaysian Chinese and Malay businesses, there

are more and more state-linked corporations and Malay entrepreneurs who have

begun to make their presence in China. The plantations-to-property conglomerate

Sime Darby, for instance, has invested in the utilities and property sectors in China.

109
Chin Yee Whah, Malaysian Chinese Business Community's Response to the Economic Rise of
China, EAI Background Brief No. 327 (Singapore: East Asian Institute, National University of
Singapore, 2007).

295
The investment holding arm of the Malaysian government, Khazanah Nasional,

opened its first overseas representative office in Beijing in May 2008. Khazanah

subsequently began to invest in China's alternative energy sector by forming a joint

venture with the Beijing China Sciences General Energy & Environment to develop

municipal waste-to-energy projects in China. Another relatively new trend is the tie-

ups between Malaysian and Chinese firms in overseas projects, as marked by the joint

venture in Sudan between Petronas (Malaysia's national petroleum firm) and China's

National Oil Company.

In October 2006, during a closed-door meeting between Abdullah and his

Chinese counterpart Wen Jiabao in Nanning, the Malaysian leader sounded out the

possibility of obtaining a loan for the construction of the Second Penang Bridge.

China responded positively, and in July 2007, the two countries signed a US$800

million loan agreement for the building of the bridge. That was the largest loan

facility given by China for a single project in a foreign country.

By the mid-2000s, it seemed clear that the growing economic benefits from

close bilateral ties - as well as the growing convergence of interests between the two

sides over various international issues as noted - have led Malaysian leaders to

downplay, if not completely overcome, the earlier apprehensions they had about the

powerful neighbor. At an event celebrating the 30th anniversary of bilateral relations

in 2004, Prime Minister Abdullah remarked: "Malaysia's China policy has been a

triumph of good diplomacy and good sense. ... I believe that we blazed a trail for

others to follow. Our China policy showed that if you can look beyond your fears and

inadequacies, and can think and act from principled positions, rewards will follow

[emphasis added]." 110

Given Abdullah's earlier experience in interacting with China in his capacity

110
Keynote Address by YAB Dato' Seri Abdullah Haji Ahmad Badawi, Prime Minister of Malaysia, to
the China-Malaysia Economic Conference, Bandar Sunway, February 24, 2004.

296
as Foreign Minister (1991-1999), it was perhaps not surprising that under his

premiership the two countries had moved to strengthen cooperation in foreign policy

issues. It was at the 30th anniversary commemorative dinner held in Beijing on May

30, 2004 that Abdullah first made his proposal for an East Asia Summit (EAS),

declaring that Malaysia and China should cooperate in setting the agenda for a new

era of regional cooperation. On November 29, 2004, at the APT Summit in Phnom

Penh, Abdullah officially proposed to hold the inaugural EAS the following year in

Kuala Lumpur. Abdullah's proposal was supported by Premier Wen Jiabao.

During the run-up to the Summit the following year, both Malaysia and China

favored limiting the EAS membership to the APT countries. Later, when it became

clear that India, Australia and New Zealand would be included in the new forum, the

two countries, along with others, then advocated making the APT as the "main

vehicle" for East Asia community building, and the EAS a "forum for dialogue" on

broad strategic, political and economic issues of common interests and concern.

Given the growing convergence of worldview between them, it was not surprising the

Chinese and Malaysian leaders have on different occasions repeatedly stressed the

need for them to cooperate over regional and international issues.

Beyond economic and foreign policy cooperation, the Abdullah administration

also continued to advance bilateral relations in other fields. For instance, efforts were

made to further promote educational and cultural exchange with China. In December

2003, the Institute of China Studies (ICS) was set up in Universiti Malaya at

Abdullah's suggestion. In May 2004, the Malaysian government agreed to establish a

Chair of Malay Studies at the Beijing Foreign Studies University (BFSU).

Good progress was also made on the field of defense, which had long

remained the least developed sector in the bilateral relations. On September 2, 2005,

the Malaysian and Chinese governments signed a Memorandum of Understanding

297
(MoU) on Defense Cooperation, which provided for military training, exchange of

personnel and visits, exchange of information, and the establishment of a joint

committee to conduct military dialogue between the two countries. The MoU was

significant because it institutionalized the bilateral defense ties, and signified

Malaysia's willingness to see China as a security partner than a security threat. Under

the MoU, the armed forces of the two countries conducted the first defense

consultation in Kuala Lumpur in May 2006.

Perhaps as a function of the deepening political trust and cooperation at both

the bilateral and ASEAN-China levels, the Abdullah administration had described

Malaysia's relations with China as one of "strategic partnership." In his speech at a

conference in Kuala Lumpur on April 28, 2004, Najib Razak, Abdullah's Deputy

Prime Minister remarked:

Today, Malaysia and China enjoy cordial relations in many areas and have
indeed forged a kind of strategic partnership, which goes beyond bilateral
ties. Both share common global perceptions and we stand together on many
international issues which have helped to form consensus among developing
and even developed states. As we move into the 21st Century, with new
challenges confronting all of us, wherever we are located, we need to better
understand each other so as to face a global environment that has come to be
dominated by a few over the many.111

In June that year, Abdullah's foreign minister Syed Hamid Albar declared at a

reception in Kuala Lumpur that "Malaysia-China relations have today matured. The

mutual confidence, respect and trust that characterize the existing cordial ties have

brought interaction between the two countries to a new and never seen before

dimension, embracing virtually all areas of human activities and endeavors."112 He

added: "Looking to the future, bilateral ties are expected to intensify even more as the

two countries launched a new 'strategic partnership' which will pave the way for the

111
Keynote Address by YAB Dato' Sri Mohd Najib Tun Abdul Razak, Deputy Prime Minister of
Malaysia, to the Conference on Malaysia-China Relations: Strategic Partnership, Kuala Lumpur, April
27, 2004.
112
"Malaysia-China relations at best stage: Malaysian FM," People's Daily, June 10, 2004.

298
future enhancement of relations at all level and all sectors of society."113

Indeed, people-to-people and socio-cultural links between Malaysia and China

have grown at a remarkable pace. According to official statistics, about 949,000

Chinese visitors came to Malaysia in 2008. This represented the fifth largest number

after Singapore, Indonesia, Thailand and Brunei, and the largest number outside

ASEAN. 114

Malaysia's maturing relations with China under Abdullah was conclusively

evidenced by the signing of two joint communiques during his term. The

communiques, which were signed on May 31, 2004 (during Abdullah's visit to China)

and December 15, 2005 (during Wen's visit to Malaysia) respectively, were the

second and the third joint communiques signed by the two governments since their

establishment of diplomatic ties in 1974.

Malaysia's current Prime Minister Najib Razak - the son of the country's

second prime minister Tun Abdul Razak - took over the reins of the country's

leadership from Abdullah on April 3, 2009. Standing on the legacy of his late father

and the foundation of his predecessors, Najib looked set to further enhance the already

strong bilateral ties between the two countries.

Even before taking the helm as the country's sixth prime minister, Najib had

already left important marks on Malaysia-China relations - first as minister of defense

(1991-1995) and then as minister of education (1995-2000). His 1992 trip to China

was the first visit by a Malaysian defense minister since the establishment of

diplomatic ties. The two countries subsequently established military attache offices in

each other's capital in 1995. Later, as the education minister, Najib visited China

again twice, first in May 1996 and then in June 1997. His 1997 visit resulted in the

1,3
Ibid.
114
Najib Razak, "China and Malaysia: A New Era of Rapport," China Daily, June 2, 2009.

299
signing of the Memorandum of Understanding on Educational Exchange, which

provided the framework and foundation for greater cooperation in education between

the two countries. Najib also played an instrumental role in the setting up of the

Malay Language Center at the Beijing Foreign Studies University. Then during his

second tenure as minister of defense (2000-2008), Najib took steps to develop closer

defense links with China. It was during his visit to China in September 2005 that the

two governments signed the MOU in Defense Cooperation.

Two months after assuming office, Najib made his first official visit to China.

During the trip, the prime minister said that it was due to "China's special ties with

Malaysia" that he chose to visit China as the first country outside ASEAN, and that he

would not only follow the footsteps of his father but intended to take the bilateral

relations to greater heights, especially with the fact that "China had advanced so far

ahead." 115 He then witnessed the signing of the Joint Action Plan on Strategic

Cooperation, which provided a framework for future cooperation in 13 key areas. The

leader called for broadening of trading base between the two countries, and said that

the two governments were considering conducting the bilateral trade in Chinese Yuan

and Malaysian Ringgit to facilitate bilateral trade financing.

On November 11, 2009, Prime Minister Najib and the Chinese President Hu

Jintao, who chose to make a 2-day state visit to Malaysia before attending the APEC

meeting in Singapore, pledged to jointly advance the "strategic and cooperative

relations" between the two countries. In light of the leaders' commitments as well as

the changing international order amidst the ongoing global economic crisis, Malaysia

115
Wong Sai Wan and Chow How Ban, "Najib's Visit Heralds a New Era of Diplomatic Ties with
China," The Star, June 4, 2009. Two weeks after the trip, in his keynote address at the 7th Heads of
Mission Conference on 22 June 2009, Najib said that his trip to China was made "because our
relationship with China is fundamental to our national interests, and because there are many mutual
lessons to be learnt and shared between our countries." See Najib Razak, "Malaysian Foreign Policy:
Future Direction for 2009-2015," Keynote Address at the 7th Heads of Mission Conference, Putrajaya,
22 June 2009.

300
and China are poised for greater heights in their bilateral relations. Malaysia-China

bilateral trade exceeded US$36 billion in 2009, and reached US$10.63 billion for the

first quarter of 2010. This has made China the country's largest trading partner,

second largest export destination, and largest source of imports.116

The earlier assertion that limited-bandwagoning has formed part of Malaysia's

China policy does not imply that Kuala Lumpur now favors a Beijing-dominated

regional order. In fact, dominance-denial continues to be an unwavering goal in

Malaysia's strategic calculation, as indicated by the country's persistency in keeping

close relations with other powers, i.e. the U.S., Japan, Russia, and India. Najib Razak

remarked in 2006 that accepting the reality of China's rise "is by no means a

reflection of our fatalism or adopting a subservient position towards China."117 Given

Malaysia's sensitivity about sovereignty and equality, along with the complexity of its

domestic ethnic structure (the uneasy relations between the majority ethnic Malays

and the minority ethnic Chinese), it seems reasonable to expect that Malaysia's

bandwagoning behavior will remain limited in the near future.

Indeed, there are indicators to suggest that, despite Malaysia's desire to gain

economic and foreign policy benefits from a rising China, the smaller state's ruling

elites have continued to hedge against the risk surrounding the rise of China. Malaysia

has kept its long-standing military ties with the Western powers. It has maintained the

FPDA; and in May 2005, it has moved to renew the Acquisition and Cross-Servicing

Agreement with the U.S., which enables the two armed forces to share logistics and

supplies for the next ten years. When asked about why Malaysia has chosen to keep

its traditional military ties with the Western powers, a retired senior official at the

116
Muhyiddin Yasin, Deputy Prime Minister of Malaysia, Keynote Address at the Malaysia-China
Chamber of Commerce 20 th Anniversary Dinner, Kuala Lumpur, May 22, 2010.

117
Mohd Najib Tun Abd Razak, Deputy Prime Minister of Malaysia, "Strategic Outlook for East Asia:
A Malaysian Perspective," Keynote Address to the Malaysia and East Asia International Conference,
Kuala Lumpur, 9 March 2006.

301
Malaysian government replied in a frank and straightforward manner, which captures

the essence of hedging behavior:

"It is a back up insurance. Let's be blunt about it. That is why until now we do not
see it necessary to completely put an end or even dissolve the FPDA. [We are doing
just] like other countries who also have working relationships with the U.S. in
particular, like Thailand, Singapore, the Philippines, so on and so forth. So what we
are doing is no different from what others are doing. In a way [this practice] provides
a kind of insurance. But the fact of the matter is that we do not want to overplay this
thing. We do not want to say it publicly. We do not want to overplay that we are
doing this because of the Chinese threat. In fact on the contrary we are saying that we
do not look upon the emergence of China as a threat to our economy, prosperity, and
security; [and that] we look upon China as a partner. But ... at the same time when
we look at China, they also have their own all sorts of insurance policies. So in the
context of realpolitik it is not something completely unusual for countries to have
something that they could fall back upon for. ... I think countries will adapt
accordingly if the scenario changes. But we are not planning comprehensively
towards adopting such a scenario because we do not want to think that that is the
scenario there, and we are hoping that China also understands that it is not the
direction that we should be pursuing because it is confrontational in nature."118

Conclusion

The discussion in this chapter suggests that Malaysia's China policy must be

explained by both structural and domestic factors. That is, while the changing

distribution of power in Asia Pacific following the abrupt end of the Cold War had

indeed compelled the Malaysian government to adjust its strategic posture vis-a-vis

the big powers - not least by reassessing China's role in regional and global affairs in

the new era, such structural forces did not in itself determine the direction and

substance of Malaysia's China policy. That is, they did not alone determine whether

and to what extent would the smaller state accept, accommodate, utilize, counter, or

reject the neighboring giant's growing power. Rather, it was the ruling BN elites'

desire to preserve and justify their domestic authority that has consistently motivated

them to adopt a hedging approach towards China as discussed above.

Malaysia's approach can be described as "light hedging" (see p. 153). It is

"light" in that while the successive leaders of the smaller state are all mindful of the

118
Author's interview with a former senior official at the Malaysian government, Kuala Lumpur,
September 28, 2009.

302
imperative to maintain, explore, and develop some strategic contingency measures

vis-a-vis the proximate big power, they have nonetheless chosen to highlight the

beneficial aspects of building a closer and more productive relationship with the

increasingly powerful neighbor, while downplaying - if not dismissing - any potential

risks that might arise from that asymmetrical power relations. Our discussion suggests

that such an approach has much to do with the changing domestic political and

economic structures in Malaysia, which necessitate the state's political elites to

increasingly rely on the interplay of economic performance, ethnic balance, and

nationalist visions as the legitimation pathways for enhancing their mandate and

capacity to rule the multi-ethnic developing country. Maintaining a close and cordial

relationship with China is central to the elite's legitimation efforts.

Malaysia's light hedging approach is a contrast to Singapore's China policy,

which is essentially a case of "heavy hedging." The latter is described as "heavy" in

that while the city-state has similarly sought to engage and develop a close working

relation with China as a pragmatic way to maximize its economic gains from the

latter's huge and expanding markets, it has nonetheless tended to place a considerable

bet on the contingency aspect of the asymmetric ties, by cultivating the continuing

presence of sufficient political and strategic counterweight to ensure regional balance

in the face of a rising big power. It is to this case that we now turn.

303
 CHAPTER 8

SINGAPORE'S CHINA POLICY,

1990-2010

"As China's development nears the point when it will have enough weight to elbow
its way into the region, it will make a fateful decision - whether to be a hegemon,
using its economic and military weight to create a sphere of influence in the region
for its economic and security needs, or to continue as a good international citizen
abiding by international rules to achieve even better economic growth."
Lee Kuan Yew, the first Prime Minister of Singapore,
1990

"China is conscious that it needs to be seen as a responsible power and has taken
pains to cultivate this image. This is comforting to regional countries. Nevertheless,
many in the region would feel more assured if East Asia remains in balance as China
grows. In fact, maintaining balance is the over-arching strategic objective in East
Asia currently, and only with the help of the U.S. can East Asia achieve this."
Goh Chok Tong, the second Prime Minister of Singapore,
2003

"We value our relations with China. I have met many senior Chinese leaders, most
recently in May, and I deeply appreciated their goodwill and friendship and their
warm welcome and their readiness to co-operate with Singapore. This co-operation
has always been on the basis of equality, mutual respect and mutual benefit -
^ P ^ E S f f i f L l - that's their slogan and that's ours too. If our co-operation is affected,
both sides will lose. I regret that my visit to Taiwan has caused this severe reaction in
China which affected relations. I also regret the way the Taiwanese media chose to
play up my private and unofficial visit. This isn't going to be the last time our
relations with a major friendly power are strained. We strive for good relations with
all countries, but from time to time issues are going to arise and big powers have their
own interests and will exercise their influence to get their way. We may be old
friends, but when our interests diverge, or even when our approaches to the same
problem differ, they have to put their interests first and their approaches first and so
must we. This is a reality of the compelling pressures of international politics and of
national interests and we must remember this."
Lee Hsien Loong, the third Prime Minister ofSingapore
2004

This chapter analyzes the key factors driving the evolution of Singapore's China

policy in the post-Cold War era, under the successive leaderships of Lee Kuan Yew,

Goh Chok Tong (1990-2004), and Lee Hsien Loong (2004-present).

Like the previous chapter, this chapter seeks to perform the task by building

304
on the three major assumptions of the Domestic Legitimation Model. First, foreign

policy choices are made by governing elites, who are concerned primarily with their

own political survival. As such, their foreign policy is geared towards reducing and

mitigating all forms of risks - security, economic, and political - that may erode their

domestic legitimacy and governance capacity. Second, the representation of risks -

which risks will be identified and prioritized as foreign policy "problems" is

constantly shaped by the way in which elites seek to enhance and justify their political

power by acting in accordance with the very foundations of their domestic authority at

a given time. Third, these foundations refer to the ruling elites' ability (real or

projected) to carry out their expected governance functions, which include not only

elite compliance with liberal-democratic norms, but also their capability to preserve

security, to deliver economic growth, to uphold sovereignty, and to pursue a certain

rationalized ideal that is peculiar to a particular country, such as the necessity of

coping with its inherent vulnerability.

These assumptions lead to the hypothesis that, the substance of Singapore's

China policy is a function of the ruling People's Action Party (PAP)'s inner

legitimation, through which the elites assess the ramifications of a rising China and

make policy choices that would serve to enhance their domestic authority to rule.

As shall be discussed below, such a dynamic of domestic legitimation has led

PAP elites to avoid pure-balancing and pure-bandwagoning strategies, and instead

adopt a mixed strategy that can be described as hedging. Pure balancing is detrimental

to PAP's domestic legitimation in that joining an anti-Beijing alliance to contain

China would certainly result in a confrontational relationship with the powerful

neighbor, create a hostile and unstable regional security environment, and incur a loss

of economic opportunities that could be garnered from China's growing market. Each

of these outcomes is harmful to PAP's efforts to preserve and enhance their authority

305
to rule at home. In a similar vein, pure bandwagoning is also considered as

undesirable and unnecessary. This is because allying with China and accepting a

subordinate role to the giant would not only negatively affect Singapore's relations

with other big powers (especially the U.S.) that are central to keeping PAP's

governance capacity. It would also risk eroding the island-city's autonomy and policy

maneuverability. Hedging, by contrast, appears to be the approach that has been

adopted by the city-state's governing elites, in their effort to cope with the challenges

and opportunities brought by a rising China under the conditions of high uncertainties.

Such a hedging approach has manifested itself in the peculiarity of

Singapore's China policy, which is by design an ambivalent one - warm in economic

and diplomatic ties but distanced in political and strategic spheres. Specifically,

while it concurs with Malaysia about the efficacy of economic pragmatism and

binding-engagement in dealing with China, it has firmly rejected limited-

bandwagoning as an option. This peculiarity has been in place since Singapore's

independence in 1965 (as evidenced by the fact that although Singapore was the first

among the ASEAN states to forge direct trade links with Beijing as early as the 1960s,

it had chosen to establish diplomatic ties with China only after Indonesia did so in

1990), and is likely to endure as long as the current conditions of geopolitical

sensitivity and strategic uncertainty continue.

In order to better explain this, this chapter is divided into four sections. The

first section analyzes the domestic determinants of Singapore's post-Cold War China

policy. The next three sections then examine the external and internal factors shaping

the evolution of Singapore's China policy along three phases: (i) Phase 1 (1989-

1996): engaging the powers amid strategic uncertainty; (ii) Phase 2 (1997-2003):

seeking closer economic ties while developing strategic contingency options; and (iii)

Phase 3 (2004- present): institutionalizing a "correct" and calculated relationship.

306
 Domestic Determinants of Singapore's Post-Cold War China Policy

Singapore's foreign policy toward China (or for that matter, its policy toward other

big powers and its key neighbors) cannot be adequately explained without referring to

the state's domestic determinants, which revolve around the way in which the ruling

PAP elites seek to justify their domestic domination by invoking, demonstrating, and

enhancing their ability to cope with Singapore's intrinsic vulnerability.

Throughout the two decades following Singapore's separation from the

Federation of Malaysia in 1965 (see Chapters 5 and 6), Lee Kuan Yew and his PAP

colleagues had consolidated their rule largely by institutionalizing an authoritarian

order that was justified on the ground of coping with the island-state's inherent

vulnerabilities, which are rooted in the state's small territory, tiny population, and

intricate geopolitical circumscription as an enclave surrounded by much larger

neighbors with dissimilar ethnic and religious backgrounds.1 By promulgating "an

ideology of survival" that stressed the imperative to alleviate those vulnerabilities, the

ruling elites persistently sought to emphasize the relative merits of "Asian values"

over the Western notion of democracy as well as the relative importance of "public"

interests over sectional concerns and individual rights, thereby legitimating a

pervasive, paternalistic one-party system that was maintained by a tactical alliance

between political elites and technocratic civil service.2

1
Chan Heng Chee, Singapore: The Politics of Survival (Singapore: Oxford University Press, 1971);
Leszek Buszynski, "Singapore: A Foreign Policy of Survival," Asian Thought and Society 29 (July
1985), pp. 128-36; Chan Heng Chee, "Singapore: Coping with Vulnerability," in James Morley, e d .
Driven by Growth: Political Change in the Asia-Pacific Region (New York: M.E. Sharpe, 1993), pp.
219-41; Michael Leifer, Singapore's Foreign Policy: Coping with Vulnerability (London & New York:
Routledge, 2000); Lily Zubaidah Rahim, Singapore in the Malay World: Building and Breaching
Regional Bridges (London & New York: Routledge, 2009).

2
Cho-Oon Khong, "Singapore: Political Legitimacy Through Managing Conformity," in Muthiah
Alagappa, e d . Political Legitimacy in Southeast Asia: The Quest for Moral Authority (Stanford:
Stanford University Press, 1995), pp. 108-35; Beng-Huat Chua, Communitarian Ideology and
Democracy in Singapore (London & New York: Routledge, 1995).

307
 While such a paternalistic order had led to a high degree of internal stability

that enabled the government to preserve its control and promote the state-driven

export-led industrialization and nation-building programs in a highly effective way,3

its associated process of "systematic depoliticization" - a conscious, top-down effort

by the ruling elites to remove the freedom of social and political choice on the part of

individual citizens - has greatly transformed Singapore's state-society relations,

making the obedience of the ruled to the authority largely contingent upon "need

fulfillment" and "rational calculations of immediate self-interests."4 This, in turn, has

resulted in making economic achievement an increasingly vital source of legitimacy

that the elites must rely on in order to preserve their political relevance and survival.5

Significantly, this performance route to legitimation has been closely entwined

with what Lily Zubaidah Rahim coins as "authoritarian nation-building", a process in

which the governing elites strive to selectively invoke the ideals of non-communal,

nationality and impartial rationality in constructing an identity of a "multiculturalism"

and "meritocratic" Singapore, as a pathway to justify their authoritarian rule deemed

essential to ensure a harmonious, stable, prosperous, and cosmopolitan Singapore.6

Under such a nation-building project, the PAP government has sought to internally

promote language and religion programs that are "fair" and "equal" to all racial

3
Linda Y.C. Lim, "The Foreign Policy of Singapore," in David Wurfel and Bruce Burton, eds., The
Political Economy of Foreign Policy in Southeast Asia (New York: St. Martin's Press, 1990), pp. 124-
45; Cherian George, Singapore: The Air-Conditioned Nation (Singapore: Landmark Books, 2000); Carl
A. Trocki, Singapore: Wealth, Power and the Culture of Control (London & New York: Routledge,
2006).

4
Cho-Oon Khong, "Singapore: Political Legitimacy Through Managing Conformity," pp. 108-14. See
also Chong Li Choy, "Durable Stability with Prosperity and Legitimacy: Perceptual Leadership in
Singapore," in Kusuma Snitwongse and Sukhumbhand Paribatra, eds., Durable Stability in Southeast
Asia (Singapore: Institute of Southeast Asian Studies, 1987), p. 172.

5
Amitav Acharya and M. Ramesh, "Economic Foundations of Singapore's Security," in Garry Rodan,
ed., Singapore Changes Guard: Social, Political and Economic Directions in the 1990s (New York: St
Martin's Press, 1993), pp. 134-52.

6
Rahim, Singapore in the Malay World, esp. pp. 43-77. See also Chan Heng Chee, Nation-Building in
Southeast Asia: The Singapore Case (Singapore: ISEAS, 1971); Michael D. Barr and Zlatko Skrbis,
eds., Constructing Singapore: Elitism, Ethnicity and the Nation-Building Project (Copenhagen: NIAS-
Nordic Institute of Asian Studies, 2008).

308
groups (for instance, by making Malay the "national" language, with English,

Mandarin, and Tamil as the other three "official" languages).7 Externally, this island-

state has cautiously downplayed the elements of kinship and "set a distance between

itself and China through the creation of a unique national identity for its people." 8

The nation-building project is not just driven by the state elites' political goals

of promoting multiracial harmony and preventing the revival of Chinese chauvinism

(which once threatened the PAP's regime survival), but it is also motivated by their

economic and strategic concerns as well. Economically, the PAP government sees

Singapore's multi-ethnic demographic structure as an asset that can be capitalized for

tapping into the emerging markets of China, India, and Middle East.9 Strategically,

Singapore's cultural and historical ties with China and India provide a "natural"

platform for the tiny state to position itself between the two powers, enabling it to

simultaneously develop close and long-term relationships with the rising powers.10

Together, these economic and strategic assets help the city-state to "take advantage of

future developments while avoiding dangerous currents."11

7
Chua Beng Huat, "Singapore: Multiracial Harmony as Public Good," in Colin Mackerras, e d .
Ethnicity in Asia (London & New York: RoutledgeCurzon, 2003), pp. 101-7.

8
Chan Heng Chee, "Singapore: Domestic Structure and Foreign Policy," in Robert Scalapino, Jusof
Wanandi, and Sung-Joo Han, e d s . Regional Dynamics: Security, Political, and Economic Issues in the
Asia-Pacific Region (Jakarta: Centre for Strategic and International Studies, 1990); Hussin Mutalib,
"The Socio-Economic Dimension in Singapore's Quest for Security and Stability," Pacific Affairs 75:1
(2002), pp. 39-56.

9
Eugene K.B. Tan, "Re-Engaging Chineseness: Political, Economic and Cultural Imperatives of
Nation-Building in Singapore," The China Quarterly 175 (September 2003), pp. 751-74; Chua,
"Singapore: Multiracial Harmony as Public Good"; Alain Vandenborre, The Little Door to the New
World: China-Singapore-India (Singapore: SNP Publishing, 2005); Faizal Yahya, Economic
Cooperation between Singapore and India: An Alliance in the Making? (London & New York: 2008).

10
Asad-ul Iqbal Latif, Between Rising Powers: China, Singapore and India (Singapore: ISEAS, 2007).

" Yuen Foong Khong, "Singapore: A Time for Economic and Political Engagement", in Engaging
China: The Management of an Emerging Power, ed. Alastair Iain Johnston and Robert S. Ross
(London & New York: Routledge, 1999), p. 113.

309
The Primacy of Performance Legitimacy

In the light of the growing importance of performance legitimacy, the PAP leadership

has regarded the task of ensuring a sustained economic growth a matter of political

survival. Accordingly, it has guarded against any possible problems that may

adversely affect Singapore's economic performance. These problems include not only

the economic risks of cyclical adverse shocks in the global market, but also the

traditional and non-traditional security threats that may disrupt Singapore's quest for

economic viability.

Because of the lack of a domestic market, the government realized that

Singapore - as in the case of the smaller developed economies - must plug into the

world market and develop an export-led development program.12 Such export-driven

economic strategy, however, is both a blessing and a challenge for the country. On the

one hand, it has enabled the city-state with no natural resources to build a vibrant

economy that is out of proportion to its size. On the other hand, a downturn in the

global economy would quickly pose significant risks to trade-dependent Singapore. It

could reduce national wealth, create unemployment, produce social hardship, and

affect the ruling party's electoral performance, thereby eroding the political

foundation of its power. The 1985-86 economic recessions and the 1997-98 financial

crisis that plagued many regional countries indicate that such risks were real and ever

present to externally-dependent economies like Singapore. The city-state was hard hit

by the mid-1980s recession, resulting in a negative growth rate for the first time since
1

1964. Although Singapore did not take long to recover from the recession, its

leaders recognized that the country was highly vulnerable because of its over-

12
Lim, "The Foreign Policy of Singapore," pp. 132-5.

13
Chong, "Durable Stability with Prosperity and Legitimacy," p. 181.

310
dependence on foreign investment, manufacturing sector, exports markets in the

developed economies, as well as the lack of indigenous entrepreneurs.14

To mitigate such vulnerabilities, the PAP government moved to adjust its

internal and external policies. Domestically, it devised a new development strategy

that was aimed at diversifying the economic base, both through facilitating the

expansion of domestic private capital, and through developing the service sector as a

vital source of growth for Singapore. 15 Externally, it sought to push for a

"regionalization" strategy, which was hoped to "geographically expand the

Singapore's economy itself." 16 This strategy led Singapore to advocate and push for

various regional economic initiatives, such as the Singapore-Johor-Riau (SIJORI)

growth triangle and the ASEAN Free Trade Area (AFTA).17

According to Helen Nesadurai, the goal of the regionalization drive was two-

fold: while it enabled Singapore to emphasize its role "as a springboard for global

TNCs locating in Singapore to operate in the region, it was also regarded as a means

of enabling domestic capital to expand beyond the confines of the limited domestic

market." 18 Beside economic rationale, the regionalization strategy also brought

political benefits to the ruling PAP government. That is, it allowed the government

"to regenerate the bases of its domestic legitimacy" by incorporating the

14
Helen E.S. Nesadurai, Globalisation, Domestic Politics and Regionalism: The ASEAN Free Trade
Area (London & New York: Routledge, 2003), p. 117. See also Henry Wai-chung Yeung, Singapore's
Global Reach: An Executive Report (Singapore: Department of Geography, National University of
Singapore, 1999), p. 7.

15
Garry Rodan, "Restructuring Divisions of Labour: Singapore's New Regional Emphasis," in Richard
Higgott, Richard Leaver, and John Ravenhill, e d s . Pacific Economic Relations in the 1990s:
Cooperation and Conflict? (Boulder, Colorado: Lynne Reinner, 1993), p. 229.

16
Ibid, p. 225.

17
Diane K. Mauzy and R.S. Milne, Singapore Politics under the People's Action Party (London &
New York: Routledge, 2002), p. 77; N. Ganesan, Realism and Interdependence in Singapore's Foreign
Policy (London & New York: Routledge, 2005), p. 54.

18
Nesadurai, Globalisation, Domestic Politics and Regionalism, p. 117.

311
predominantly ethnic Chinese domestic capital as both "a source of growth" and as

"part of the ruling elite, albeit as the junior partner in the ruling coalition of

political/bureaucratic elites and state capital."19

The cyclical economic downturns were not the only source of problems that

could affect the PAP government's quest for economic viability. There were other

challenges as well. These included all sources of external problems that may disrupt

or deny the government's efforts to ensure a continuing economic growth. Such

problems encompassed not only the traditional military and non-military security

threats that may endanger the physical and resource base of the city-state, but also the

externally-imposed political forces that may erode the autonomy base of the

Singapore government as a sovereign entity. I will return to these themes below. Here,

suffice it to note that because most if not all of these security and political challenges

inevitably involve the role of big powers in one way or another - either as a source of

problem, a source of solution, or both - it is necessary to discuss the ambivalent roles

of big powers in the PAP government's domestic legitimation project.

Implications for Singapore's Policy towards the Big Powers

The PAP government's overriding quest for uninterrupted economic growth - and by

extension, its performance legitimacy - has had ramifications for the country's policy

towards the big powers.

Chiefly because of the big powers' ability to make or break the PAP elites'

efforts to pursue a sustained economic growth and a stable regional environment for

their ultimate goal of domestic legitimation, the government has taken an extremely

cautious and calculated approach towards the major actors. As we shall see later, the

bottom line of Singapore's big power strategy has been to cultivate and capitalize on

19
Ibid., p. 118.

312
its multifaceted relations with the major powers, to hedge against all forms of actual

and perceived threats. These threats take the forms of economic, security, and

political risks. Each risk originates from external sources that are beyond the

country's control; each risk brings the danger of undermining the ruling elites' ability

to govern; and each risk requires the smaller state's policymakers to integrate the role

of the big powers into its national strategy.

The Pulls: Getting Closer to Big Powers in order to Mitigate Economic Risks

The imperative of mitigating its innate economic fragility and ensuring a continuous

economic growth has constantly driven PAP elites to reinvent Singapore's economy.

This is done by searching for new engines of growth, and by diversifying the island-

state's sources and destinations for trade and investment. Singapore's relations with

the big powers were deemed central to such reinvention and diversification efforts.

The U.S. has long played a crucial role in Singapore's economy. Since the

1970s, it has been an important market for Singapore, absorbing about one-fifth of the

country's total exports on average. Beyond trade, the U.S. is also a leading source of

technology and investment for Singapore. This role has become even more important

as the island attempts to develop its information and service sectors.

Japan, too, is economically significant for Singapore as it has been an

important trade and investment partner ever since the early days of its

industrialization. Despite Singapore's collective memory about Japan's brutal

occupation during the Pacific War, Japanese work ethics and industrial organization

have been viewed with great admiration, especially among the elites.20 Japanese

investment in Singapore increased substantially after the 1985 Plaza Accord.

The need to diversify Singapore's trade destinations beyond its more

20
Leifer, Singapore's Foreign Policy, p. 124.

313
established markets in the developed world has also driven the government to

constantly explore commercial opportunities with as many countries as possible. It

especially targets those countries that promise huge markets, are steered by

politically-committed reformers, and are keen on attracting foreign investments.

These included not only China after 1978, but also India after 1991 (discussed

below). 21

Singapore's economic relations with China have a long history. As far back as

the 1960s, in the absence of formal diplomatic ties, the two countries had already

established bilateral trade and investment relations. The launch of China's reform and

the open-door policy created greater momentum for Singapore's march into the

Chinese market. This was further heightened after Singapore's recession in the mid-

1980s and the government's plan to develop a "second wing" of the nation's

economy. Largely because of the complementary nature of the two economies,

Singapore-China trade has grown steadily over the years. The city-state had long

remained China's largest trading partner in the ASEAN region throughout the Cold

War period and the first decade of the post-Cold War era.

The Pushes: Keeping the Right Distance to reduce Political and Security Risks

Despite the growing momentum to pull Singapore into developing closer economic

ties with all the big powers whenever and wherever possible, the city-state's relations

with the major actors have been constrained by its deep-seated concerns over possible

political and security risks that may arise from the asymmetric power relations.

Precisely because of its size and geopolitical vulnerability, Singapore's leaders

have always viewed the republic's sovereignty, freedom of action, and equality with

21
Latif, Between Rising Powers.

314
other countries as the most fundamental values that need to be defended at all costs.22

Without these core ideals that define and support Singapore's status as an independent

political entity in the Westphalian international system, the ruling elite's domestic

legitimacy and external credibility would be called into question, thus threatening the

very survival of the polity. For this reason, ever since the island attained its statehood

following its abrupt separation from the Federation of Malaysia in 1965, its PAP

government has worked to ensure that it will not be pushed around by larger

countries. Its foreign policy has relentlessly sought to prevent Singapore from being

held captive by other actors, be they immediate neighbors or big powers.23

There are several forms of political risks that the PAP leaders have strived to

resist against, inter alia: (1) externally-supported acts that attempt to challenge

Singapore's political status quo; (2) armed external interventions that violate the

principle of national sovereignty in cases resembling Singapore's geopolitical

situation; and (3) open external pressures that attempt to compel it to give undue

political deference. Singapore's elite is adamant about the latter for fear that any sign

of weakness would invite more external pressures in the future.

The elites' acute sensitivities about these political risks explain the republic's

"incomplete" partnership with the U.S. as well as its ambivalent relations with the

rising China.

In the case of the U.S.-Singapore relations, despite the importance of the

Americans in ameliorating the city-state's economic risks and security challenges

(discussed below), bilateral relations were occasionally strained, chiefly resulting

22
Lee Kuan Yew, Prime Minister of Singapore, "We Want to be Ourselves," speech before the
Seminar on International Relations, the University of Singapore, October 9, 1966; Wong Kan Seng,
Minister for Foreign Affairs and Minister for Community Development, "Continuity and Change in
Singapore's Foreign Policy," speech at the Singapore Press Club, November 15, 1988.

23
Leifer, Singapore's Foreign Policy.

315
from problems associated with political risks. During the late 1980s, the Lee Kuan

Yew government expelled a first secretary from the American Embassy for actively

encouraging a prominent Singaporean lawyer, Francis Seow, to contest as an

opposition candidate. Earlier, driven by its deep concern about the principle of non-

interference in the internal affairs of states, Singapore had taken a public stance

opposing Washington at the UN General Assembly over the U.S. invasion of

Grenada. 24 In the 1990s, during the second Prime Minister Goh Chok Tong's tenure,

Singapore-U.S. ties similarly went through several political controversies. Topping

the list was the case of Michael Fay, an American teenager who was caned for

vandalism. Despite President Clinton's public appeal, Fay's sentence was upheld and

only reduced from six strokes of the cane to four, thus demonstrating to regional

audiences its determination to not succumb to external pressures.25

Such political episodes, together with the PAP's strong reactions to the U.S.

periodic accusations over the practice of democracy and press freedom in Singapore,

reflected the government's sensitivity to foreign interference. At a deeper level, the

problems also mirrored the gulf in political values between the two sides, illustrated

by the debates on Asian values, over which Singapore readily found like-minded

supporters in Malaysia and China 2 6 These political divergences thus rendered the

Singapore-U.S. partnership "incomplete", or at least one that was not akin to

Washington's relations with London, Canberra and Tokyo.

Concerns over political risks (and long-term security ramifications as shall be

discussed) also affected Singapore's policy toward China, but in an entirely different

way. Notwithstanding Singapore's position in embracing economic pragmatism and

24
Ganesan, Realism and Interdependence in Singapore's Foreign Policy, p. 19.

25
Tommy Koh and Chang Li Lin, eds., The Little Red Dot: Reflections by Singapore's Diplomats
(Singapore: World Scientific Publishing, 2005), p. 114 & p. 423.
26
Ganesan, Realism and Interdependence in Singapore's Foreign Policy, Denny Roy, "Singapore,
China, and the 'Soft Authoritarian' Challenge," Asian Survey 34:3 (March 1994), pp. 231-42.

316
engagement policies, it was deeply concerned about the likely ramifications of a

powerful China for its manoeuvring space. From the PAP perspective, having a big

power in close proximity with unclear strategic intentions was a potential problem

that required careful handling. If unchecked by countervailing forces, this power was

likely to dictate its political will upon smaller actors like Singapore. The diplomatic

feud in August 2004, sparked by the then Deputy Premier Lee Hsien Loong's visit to

Taipei, may have reinforced such a perception. I will elaborate this below.

This political risk is complicated further by Singapore's demographic profile

and its geopolitical difficulty as "a Chinese island in a Malay sea." With ethnic

Chinese comprising up to 76 per cent of its population, it has always been uneasy

about its image as the "third China", for fear of drawing suspicion from its two larger

Muslim-dominant neighbors, Malaysia and Indonesia, which have not been entirely

comfortable with the existence of a Chinese-dominated entity in the region.27 During

the Cold War, as discussed in Chapter 6, largely out of its desire to avoid alienating its

neighbors, Singapore made clear that it would not establish diplomatic ties with

Beijing until Indonesia had done so. Even after the end of the Cold War, Singapore

has attempted to downplay any ethnic affinity in bilateral relations, and to avoid

leaving any impression that it was promoting China's interest in the region.28

In the following pages, I shall discuss how the interplay of these pulls and

pushes has shaped Singapore's policy toward China throughout the post-Cold War

years.

27
Leo Suryadinata, China and the ASEAN States: The Ethnic Chinese Dimension (Singapore: Marshall
Cavendish Academic, 1985/2005), p. 81

28
Khong, "Singapore: A Time for Economic and Political Engagement", p. 119; Evelyn Goh,
"Singapore's Reaction to a Rising China: Deep Engagement and Strategic Adjustment", in China and
Southeast Asia: Global Changes and Regional Challenges, ed. Ho Khai Leong and Samuel C.Y. Ku
(Singapore and Kaohsiung: ISEAS & CSEAS, 2005), p. 316.

317
 Phase I (1989-1996):
Engaging the Giant amid Strategic Uncertainty

The end of the Cold War and the collapse of the Soviet Union - which roughly

coincided with Goh Chok Tong's assumption of power as Singapore's second Prime

Minister in November 1990 - presented Singapore and other ASEAN states with

mixed consequences. On the one hand, the structural changes forced the Vietnamese

troops to withdraw from Cambodia, thereby removing the military threats from the

communist bloc and improving the security environment for the ASEAN countries.

On the other hand, however, the disappearance of the bipolar structure also ended the

decades-long strategic clarity and predictability, giving way to an era of strategic

uncertainty.29 The sense of uncertainty was aggravated when it appeared that the U.S.

- now the lone superpower - might close its bases in the Philippines and retreat from

the region. That sense of uncertainty was also heightened by the concern about the

future of China after the Tiananmen incident in June 1989.

Compelled in part by the structural pressures to cope with the prevailing

strategic uncertainties and in part by the domestic imperatives to ensure growth and

explore economic opportunities, the PAP government responded to these

developments by simultaneously taking steps to retain the U.S. military presence in

the region, and by engaging China through a multiple range of bilateral efforts and

multilateral channels, which were made available as a result of the burgeoning

multilateral processes in Asia Pacific in the immediately post-Cold War era.

Singapore's post-Cold War China policy must be discussed within the larger

context of the post-Tiananmen ASEAN-China relations. Although Lee Kuan Yew

openly commented on June 5, 1989 that the firepower and violence used by the

29
Yuen Foong Khong, "Coping with Strategic Uncertainty: The Role of Institutions and Soft Balancing
in Southeast Asia's Post-Cold War Strategy," in J.J. Suh, Peter J. Katzenstein, and Allen Carlson, eds.,
Rethinking Security in East Asia: Identity, Power, and Efficiency (Stanford: Stanford University Press,
2004), pp. 172-208.

318
Chinese authorities was "totally disproportionate to the resistance unarmed civilians

offered", 30 the premier did not condemn the Chinese leadership. Instead, he noted that

because of its sheer size, a China "with people resentful, reforms stalled, and

economy stagnant" could "create problems for herself and her neighbors in Asia."31

Lee's stance was that the world should not isolate China, and that it should continue

Deng Xiaoping's policy of opening to the world. 32 This stance put him in line with his

counterparts in Kuala Lumpur and other ASEAN capitals, who similarly stressed the

importance of engaging the neighboring giant in the light of strategic uncertainty. As

noted in Chapter 7, the ASEAN states' position coincided with Beijing's good

neighborhood policy, which was aimed at strengthening its relations with the

neighboring countries to counter Western isolation. This convergence thus gave rise

to a period of mutual engagement between China and the ASEAN states.

It was against this backdrop that Singapore - following Indonesia's footsteps

on August 8, 1990 - decided to establish diplomatic ties with China on October 3,

1990. Lee recalled in his memoirs: "I had said on many past occasions that Singapore

would be the last country in ASEAN to establish diplomatic relations with China.

Now that Indonesia had restored diplomatic relations, I wanted to resolve this before I

stepped down as prime minister in November that year." 33 Lee's decision ended

Singapore's 25-year practice of "separating trade from politics" and avoiding official

ties with the giant. Two weeks later, on October 16, Lee made his fourth and final

visit to China as premier.

Lee's trip was followed by a series of frequent visits between the leaders of

30
Lee Kuan Yew, From Third World to First: The Singapore Story 1965-2000 (Singapore: Times
Media and The Straits Times Press, 2000), p. 693.

31
Ibid.
32
Ibid, pp. 695-7.

33
Ibid, p. 701.
the two countries. 34 These included: (a) President Wee Kim Wee's trip in September

1991, which was the first Singapore Head of State's visit to China; (b) President Yang

Shangkun's reciprocal visit in January 1992, which was the first Chinese Head of

State's trip to Singapore; (c) Senior Minister Lee Kuan Yew's visits in September

1992, May 1993, July 1993, February 1994, September 1994, August 1995, and

August 1996; (d) Prime Minister Goh Chok Tong's visits in April 1993, February

1994, and May 1995; (e) President Jiang Zemin's visit to Singapore in November

1994; (f) President Ong Teng Cheong's visit to China in August 1995; (g) Deputy

Prime Minister's Li Hsien Loong visits in October 1995; (h) Chairman of Chinese

People's Political Consultative Conference Li Ruihuan's visit in December 1995, etc.

The period 1989-1996 also witnessed bilateral visits at the ministerial level in the

areas of Home Affairs, Defense, Foreign Affairs, Health, Trade, Culture, and so on.

These frequent high-level exchanges allowed the Singapore government to

explore trade and investment opportunities in China, and provided valuable avenues

for the policy elites to interact and develop personal contacts with their Chinese

counterparts, so as to engage the rising power. Denny Roy observes that the frequent

bilateral interactions at that time, to some extent, were also a sign and a manifestation

of "a united front" between the leaders of the two countries in their rhetorical battle

against the West's liberalism.35

As in the case of Malaysia's China policy discussed in the previous chapter,

Singapore's bilateral engagement efforts during the first half of the 1990s were also

complemented by the role of the bourgeoning multilateral processes in the post-Cold

War Asia Pacific region. Like Malaysia, Singapore was also a major advocate and

34
This section is drawn from Sino-Singapore Friendship 1990-1994 (Singapore: Taisei, 1994);
Singapore-China 1990-2000 (Singapore: Singa-Sino Friendship Association of Singapore and China-
Singapore Friendship Association of China, 2000).

35
Roy, "Singapore, China, and the 'Soft Authoritarian' Challenge," pp. 235-9.

320
practitioner of what can be described as "binding-engagement" policy, which was

aimed at creating institutionalized linkages and increasing voice opportunities vis-a-

vis the rising power for the ultimate goals of ameliorating the non-status quo elements

of the power's behavior. 36

Acting together with other ASEAN partners, Singapore's engagement policy

is implemented both through economic incentives and regional dialogue

mechanisms. 37 The ASEAN Regional Forum (ARF) - the only multilateral security

forum in Asia Pacific that was established in 1993-94 - emerged as the key platform

for Singapore and other regional countries to engage and to bind China into the

regularized dialogue processes in the Asia Pacific. In July 1993, just before the

founding dinner of the ARF, Singapore's Prime Minister Goh Chok Tong remarked

that "Beijing's involvement in regional dialogue on peace and security was important

to ensure that economic competition would not result in conflict." 38 In addition to

ARF, Singapore and other countries also sought to integrate China into the existing

international order through the newly developed formal and informal multilateral

processes such as the Asia Pacific Economic Cooperation (APEC), Council for

Security Cooperation in Asia Pacific (CSCAP), the ASEAN-China political

consultation at senior official level, and the Asia-Europe Meeting (ASEM).

By engaging and binding Beijing in a web of regional institutions, Singapore

hoped to give China a stake in regional peace and stability.39 To quote Evelyn Goh:

"Singapore wants to see China enmeshed in regional norms, acting responsibly and

36
Randall L. Schweller, "Managing the Rise of Great Powers: History and Theory," in Alastair Iain
Johnston and Robert S. Ross, e d s . Engaging China: The Management of an Emerging Power (London
and New York: Routledge, 1999), pp. 13-5.
37
Yuen Foong Khong, "Singapore: A Time for Economic and Political Engagement", pp. 109-28.

38
Cited in Michael Leifer, The ASEAN Regional Forum, Adelphi Paper No. 302 (London: The
International Institute for Strategic Studies, 1996), p. 28.
39
Allen Whiting, "ASEAN Eyes China: The Security Dimension," Asian Survey 37:4 (1997).

321
upholding the regional status quo." 40

One might wonder: why does Singapore care so much about the regional

status quo, and how is China factored in? As mentioned earlier, Singapore is a tiny

state with an acute sense of vulnerability.41 According to the late Michael Leifer, in

order to cope with this vulnerability, Singapore has since 1965 resorted to a three-fold

approach, i.e. promoting economic interdependence, pursuing armament and alliance,

and cultivating a balance of power at the regional level.42 These approaches, in turn,

are contingent on the following pillars of "regional status quo-ness," namely regional

peace and stability, freedom and safety of sea-lanes, a cohesive ASEAN, and a stable

distribution of capabilities among the big powers. For instance, if there is no safe and

free navigation of commercial vessels, Singapore's economic viability will be

severely affected; if ASEAN is weak and split, Singapore will not be able to play a

disproportionate role in external affairs; and if there is no stable balance of power,

Singapore's autonomy will be compromised by the emergence of a dominant power

that is likely to limit smaller actors' strategic maneuverability.43 Each of these

possibilities poses significant risks to the governance foundation of the PAP elite,

who have long relied on the performance-route-to-legitimation to consolidate and

prolong their hold on power in the country.

This is where Singapore's concerns over Taiwan and the Spratlys disputes

come in. Given Singapore's high dependence on maritime trade and safety of the sea

40
Evelyn Goh, "Singapore's Reaction to a Rising China: Deep Engagement and Strategic Adjustment,"
in Ho Khai Leong and Samuel C.Y. Ku, eds., China and Southeast Asia: Global Changes and Regional
Challenges (Singapore and Kaohsiung: ISEAS & CSEAS, 2005), p. 313.
41
See Barry Desker and Mohamed Nawab Mohamed Osman, "S Rajaratnam and the Making of
Singapore Foreign Policy," in Kwa Chong Guan, ed., S Rajaratnam on Singapore: From Ideas to
Reality (Singapore:World Scientific Publishing, 2006), pp. 3-20.

42
Leifer, Singapore's Foreign Policy.

43
Ian Storey, "Singapore and the Rise of China: Perceptions and Policy," in Herbert Yee and Ian
Storey, eds., The China Threat: Perceptions, Myths, and Reality (London & New York: Routlede,
2002), pp. 205-26; Goh, "Singapore's Reaction to a Rising China."

322
navigation, the PAP elites have been concerned about the possibility of regional

conflict that might disrupt regional tranquillity. Although not a direct party to Taiwan

and the Spratly issues, the PAP elites were worried that China's potential actions in

these areas may bring about consequences that threaten Singapore's interests in

preserving regional stability and prosperity. In the eyes of the republic's leaders, the

Cross-Strait situation is potentially the most threatening problem in the region. They

understand that if Taiwan pursues independence, China will not stand idly by, and

war will break out; and if there is a miscalculation between China and the U.S. over

the situation, the war will escalate into a war involving great powers. In a conflict of

this magnitude, the whole region - Singapore included - would suffer grave

consequences. For these reasons, the PAP leadership becomes nervous whenever

there is rising tension in the Taiwan Strait. During the 1996 crisis, Singaporean

officials feared that any armed conflict in the region "could totally destabilize foreign

trade and investment." 44

Similarly, although Singapore is not a claimant to the Spratlys, it is concerned

that the dispute will affect the safety and freedom of navigation in the South China

Sea 45 Moreover, the Spratlys also provides a "test case" to gauge how China will

exercise its new-found military and economic power.

For Singaporean leaders, there is little doubt that China will be powerful

enough to alter the strategic landscape of Asia. The question, however, is less about

capability than intention - how a strong China will exercise its newfound power in the

region. Such concern is well reflected in Lee Kuan Yew's statement in 1996:

As China's development nears the point when it will have enough weight to elbow its
way into the region, it will make a fateful decision - whether to be a hegemon, using
its economic and military weight to create a sphere of influence in the region for its

44
Whiting, "ASEAN Eyes China," p. 308.

45
Storey, "Singapore and the Rise of China: Perceptions and Policy," p. 213.

323
 economic and security needs, or to continue as a good international citizen abiding by
international rules to achieve even better economic growth.46

In view of the lingering uncertainties over Beijing's intentions, Singapore has

cautiously adopted measures that can be described as indirect-balancing and

dominance-denial as a "fallback position" should engagement fail. 47 It has sought to

enmesh other big powers in regional affairs, diversify its strategic linkages, and

strengthen its military ties with the U.S. 48 Such a position is very much a reflection of

a "classic anticipatory state" as described by Yuen-Foong Khong. In his words, "the

time frame for Singapore's ruminations about China is not now, or even five years

down the line; it is twenty to thirty years hence." In this regard, PAP leaders tend to

"think in terms of possible scenarios for the future and how they might affect

Singapore." 49 Given its relative geographical distance as well as the absence of

territorial disputes, China does not pose any direct security threat to the city-state.

Singapore's concerns about China, thus, are cast mainly in the mid- and long-term

light, i.e. whether or not Beijing's behavior will: (a) disrupt regional stability and

prosperity; (b) limit Singapore's policy choices; and (c) drive a wedge between

Southeast Asian states that would undermine ASEAN cohesion.50

Singapore's quintessence as an anticipatory state is clearly illustrated by a

decision made by Lee Kuan Yew in the immediate post-Cold War era. In the late

1980s, when it appeared that the U.S. might have to close the Clark and Subic bases
46
Quoted in Yuen Foong Khong, "Singapore: A Time for Economic and Political Engagement," pp.
116-7.
47
Ibid., p. 121; Wayne Bert, The United States, China and Southeast Asian Security: A Changing of the
Guard (New York: Palgrave MacMillan, 2003), p. 180.
48
Tan See Seng, "Riding the Chinese Dragon: Singapore's Pragmatic Relationship with China," in Jun
Tsunekawa, ed.. The Rise of China: Responses from Southeast Asia and Japan (Tokyo: The National
Institute for Defense Studies, 2009), pp. 21-45.

49
Yuen Foong Khong, "Singapore: A Time for Economic and Political Engagement", p. 113.

50
Evelyn Goh, Meeting the China Challenge, Policy Studies 16 (Washington, D.C.: East West Center
Washington, 2005), p. 13.

324
in the Philippines, Singapore's leaders began to fear that the American withdrawal

would create a "power vacuum" in the Asia Pacific region. In their view, this might

lead regional powers, namely Japan, China, and India, to fill the vacuum by

competing for regional leadership. If that happened, instabilities would kick in, which,

in turn, would threaten Singapore prosperity and his PAP's political survival. To

forestall this, Lee decided to "stick with what has worked so far," i.e. the American

military presence that he saw as "essential for the continuation of international law

and order in East Asia." 51 Largely due to Washington's role in assisting and

protecting maritime Southeast Asia from communist expansion during the Cold War,

Singapore's leaders saw the U.S. as the only benign giant that could maintain a stable

regional balance of power.

In August 1989, Singapore declared publicly for the first time that it would

grant the United States Navy and Air Force access to its military facilities, and a

memorandum of understanding (MoU) was signed in 1990, which allowed a

rotational squadron of the U.S. fighter aircraft to deploy to Singapore's Paya Lebar

Air Base. This was followed by the signing of another MoU in 1992, which enabled

the U.S. Navy to relocate the Commander, Logistics Group, Western Pacific

(COMLOG WESTPAC) - a logistics unit of the U.S. Seventh Fleet - to Singapore

after its withdrawal from Subic Bay Naval Base in the Philippines.52 These strategic

decisions thus sustained the U.S. forward military position in Southeast Asia, thereby

laying an important foundation for the evolving regional security architecture in the

post-Cold War era.

While Lee's decision was aimed at coping with strategic uncertainty in

51
Khong, "Coping with Strategic Uncertainties," pp. 181-2.

52
Derek da Cunha, "Defense and Security: Evolving Threat Perceptions," in Derek da Cunha, e d ,
Singapore in the New Millennium: Challenges Facing the City-State (Singapore: Institute of Southeast
Asian Studies, 2002), p. 144.

325
general rather than China in particular, it turned out that Beijing's action over the

Mischief Reef a few years later became part of the uncertainty he was worried about.

A decade after his 1989 decision, Lee remarked:

There was a time, at the height of the Asian economic miracles, around 1990, when
Indonesia believed that it could carve out an area of influence for itself, when the US
forces left Subic Bay. Hence in 1990 when we gave the US access to our bases and
allowed them to maintain a logistics support unit in Singapore there were protests.
But when in the mid-1990s China built facilities on the islands in the Spratlys and the
Paracels, especially after fishermen's huts were built on Mischief Reef, it was not
only the Philippines who realized that the dismantling of bases at Subic Bay did not
add to security and stability. Attitudes toward the American access to Singapore
bases underwent a silent change.53

To the PAP leaders, American military presence was an essential factor that

could help to preserve stability in Southeast Asia and the wider Asia-Pacific region,

not least by constraining China's security behavior and the potential remilitarisation

of Japan. In addition, they judged that the U.S.-Singapore security cooperation -

albeit informal in structure - could further mitigate Singapore's security risks, by

augmenting its credible deterrence posture and ensuring that no local powers would

be able to dominate the island state's immediate security environment.54 A Singapore-

based scholar thus notes that the United States "is important to Singapore's survival,

development, and prosperity. It is Singapore's number one trading partner, investor,

and export market, and is also an important factor in Singapore's strategic and

security considerations." 55

Such a military-based "indirect-balancing" approach was augmented by a

political -based dominance-denial policy, which sought to use the growing regional

53
Lee Kuan Yew, "ASEAN Must Balance China in Asia," New Perspectives Quarterly 18:3 (Summer
2001), p. 21.

54
Leifer, Singapore's Foreign Policy; Tim Huxley, Defending the Lion City: The Armed Forces of
Singapore (NSW, Australia: Allen & Unwin, 2000), especially pp. 36-72.

55
Shee Poon Kim, "Singapore in 1991: Endorsement of the New Administration," Asian Survey 32:2
(February 1992), p. 124.

326
multilateral platforms as a means to ensure the concurrent involvement of multiple big

powers in regional affairs, for the larger objective of preventing and denying the

emergence of a single dominating hegemon. As remarked by Barry Desker, a former

Singapore diplomat and currently the dean of the influential S. Rajaratnam School of

International Studies (RSIS) in June 1992: "Our interests will be served if the regional

political and security structure which evolves ultimately fosters the involvement of

not just the countries of Southeast Asia, but also the participation of other countries in

the Asia-Pacific, including the United States, Japan, China, Russia, India and

Australia. With the involvement of a number of states, no single power could impose

its own policies on the rest." 56 The inception of ARF in 1993-94 - which allowed "a

complex interplay of several powers" 57 at a diplomatic multilateral setting - was one

of the key platforms that Singapore relied on to perform the task of dominance-denial.

Another, more recent platform was the East Asian Summit (EAS) that was created in

2005 (discussed below).

While adopting a fallback position by pursuing indirect-balancing and

dominance-denial measures to guard against the uncertainty surrounding the rising

China, Singapore also continued its long-held policy of economic pragmatism, with

the goal of maximizing economic benefits from China's growing market.

Economic motivation has always been a key driving force behind Singapore's

China policy. As noted, during the Cold War, even when Singapore had no diplomatic

relations with the PRC, it was already China's largest trading partner in the ASEAN

area. After the establishment of formal diplomatic ties in 1990, bilateral trade

relations have continued to develop and flourish. Beyond trade, the close bilateral

economic cooperation has also taken the forms of direct investment and management

56
Barry Desker, "Singapore's Place in the Pacific Rim," address at the Pre-University Seminar 1992
"Singapore's Place in a Changing World," Singapore, June 2, 1992.

"Ibid.
skills transfer. A case in point is the flagship Suzhou Industrial Park (SIP) project,

which started in February 1994 when the two governments signed an agreement to

develop a seventy-kilometer industrial park in Suzhou into "a mini-Singapore in

China." The project remains a hallmark of the bilateral cooperation.

At the people-to-people level, this period also witnessed increased exchanges

in the areas of education, research, tourism, language, and other socio-cultural

activities. For instance, in June 1991, a top-level academic team from the National

University of Singapore (NUS) visited China in the first exchange between NUS and

China's top universities to explore areas of cooperation in science and engineering. In

October 1992, the Research Committee of the Singapore Federation of Chinese Clan

Associations organized a dialogue between the Chinese and Singaporean research

institutions working on Southeast Asian Studies. In July 1993, the Singa Sino

Friendship Association (SSFA) was established in Singapore.58

Phase II (1997-2003):
Seeking Closer Economic Ties While Developing Strategic Contingency Options

Singapore's China policy during this period was characterized by an enduring

economic pragmatism to pursue closer economic ties with China, as well as a

persistent inclination to keep strategic contingency options by developing

multifaceted relationships with different power centers, to hedge against future

uncertainties. Each of these features was reinforced by, and contributed to, the

growing multilateralism in the Asia Pacific (in the form of the expanding ASEAN-

based regional institutions), which was boosted in part by the 1997-98 East Asian

financial crisis.

One of the key trends of the economic relations that emerged during the

58
Lim Beng Haw and Ng Loke Koon, e d s , Sino-Singapore Friendship 1990-1994 (Singapore: Taisei,
1994).

328
second half of the Goh Chok Tong's premiership was the progressive rise of China's

share in Singapore's total trade. In 2001, China and Hong Kong taken together

overtook Japan for the first time to become Singapore's fourth largest trading partner.

They surpassed the European Union (EU) as Singapore's third largest partner in 2002,

and overtook the United States to become the second largest trading partner in 2003.

This trend was attributable chiefly to Singapore's persistent policy of

economic pragmatism in maximizing its commercial link with China. But it was also

due to the relative increase in the intra-regional trade in East Asia after the financial

crisis, as well as the growth of China's demand for Singapore (and other regional

economies)'s imports after its accession into the World Trade Organization (WTO) in

2001. The trend continued after the launch of the early harvest program under the

ASEAN-China Free Trade Area (ACFTA) in 2004.

This economic pragmatism towards China was pursued parallel to the

republic's strategy towards India. Under Goh Chok Tong's leadership, the

government sought to plug into the Indian market since New Delhi started its

economic reforms in 1991. Goh envisaged that Asia's growth will be powered by the

re-emergence of China and India. 59 In his view, integrating Singapore with both

economies would allow the city-state to ride on their growth. Goh felt that Singapore

should position itself to "serve as a bridge to facilitate economic interaction between

these two giant economies." 60 By simultaneously investing in the two gigantic Asian

economies, Goh's vision was a key component of the PAP government's economic

diversification strategy aimed at reducing the risks of over-dependence on the

developed world.

Despite the increasing economic importance of China to the PAP government,

59
Latif, Between Rising Powers.

60
Goh Chok Tong, "India and Singapore: Trade Liberation and Economic Integration," address at the
Business Meeting, Federation of Indian Chambers of Commerce and Industry, New Delhi, 8 April
2003.

329
its China policy was still constrained by its governing elites' ingrained concerns over

the potential political and security implications of a powerful China for smaller states

like Singapore.

It was because of these lingering concerns that Singapore's China policy was

still colored by the elements of indirect-balancing and dominance-denial. This was

evidenced by its moves to: (a) openly advocate the U.S. to play a balancing role as

China continues to grow; (b) further enhance the Singapore-U.S. military cooperation;

and (c) actively endeavor to ensure the continuing involvement of several big powers

in regional affairs.

Indeed, a central pillar of Singapore's post-Cold War strategic posture was its

maturing security partnership with the U.S., both in the domains of military and

regional institutions. The partnership, to some extent, is attributable to a strategic

concern that was increasingly shared by the two countries as events unfolded in the

post-Cold War era, i.e. the rise of China and its possible implications for regional

status quo.

Given the fact that there was no territorial dispute between Singapore and

China - unlike Beijing's relations with some ASEAN states - China did not pose any

direct or immediate security challenge to the city-state. China's challenge was more

indirect and political in nature. Singapore's leaders, like their counterparts in most

ASEAN countries, have always been concerned about the likelihood of China

becoming a hegemon which might impose its political will upon smaller countries.

This is considered a political and not a security risk, because what is at stake is less

about territorial integrity or population safety than it is about sovereignty and freedom

of action. Singapore's fear of political risks has driven it to turn to the U.S. to ensure a

stable balance of power. This is well reflected in a statement made by Goh Chok Tong

in 2003, when he remarked that while regional countries feel comforted by China's

330
recent efforts to cultivate an image of a responsible power, "many in the region would

feel more assured if East Asia remains in balance as China grows. In fact, maintaining

balance is the over-arching strategic objective in East Asia currently, and only with

the help of the U.S. can East Asia achieve this [emphasis added]."61

Earlier, in 1998, the Singapore government sought to further strengthen its

military ties with the U.S. by constructing a pier at the new Changi Naval Base,

designed specially to accommodate the American aircraft carriers. Upon its

completion in 2000, the expanded naval base allowed U.S. Navy carriers to berth

without having to anchor off-shore. This enabled the U.S. to avoid the need to ferry its

navy personnel from ship to shore.62 The extent of the close defense cooperation

between the two countries has led one observer to note that "although Singapore does

not have a formal military alliance relationship with the United States, the extent and

nature of United States-Singapore defense ties make this particular relationship far

more substantial and weighty than some of the formalized military alliances America

has with other countries." 63

It must be noted that the growing Singapore-U.S. security ties are not all about

the China factor. In fact, Singapore's recent efforts to strengthen its security

collaboration with Washington have less to do with China, and more to do with its

new concerns about combating terrorism in the post-September 11th world.64 After the

terrorist attacks in the U.S. and the discovery of the al-Qaeda linked terrorist networks

in Southeast Asia, Singapore's threat perceptions have undergone a significant

change. 65 In December 2001, Singapore arrested members of the extremist Jemaah

61
Goh Chok Tong, "Challenges for Asia," speech delivered at the Research Institute of Economy,
Trade and Industry (RIETI) Special Seminar, Tokyo, March 28, 2003.

62
da Cunha, "Defense and Security," p. 144.

63
da Cunha, "Defense and Security," pp. 144-5.

65
Government of Singapore, The Jemaah Islamiyah Arrests and the Threat of Terrorism, White Paper
Presented to Parliament (Singapore: Ministry of Home Affairs, 2003); Government of Singapore, The

331
Islamiah (JI) group, and uncovered plots to bomb U.S. facilities and Singaporean

installations on the island. Fighting terrorism is now regarded as Singapore's top

security agenda, overlapping with the U.S. interest in the region. This common

concern has substantially strengthened the Singapore-U.S. partnership, and it has

joined several U.S. initiatives in combating terrorism, including the Container

Security Initiative (CSI), the Proliferation Security Initiative (PSI), and policing of

terrorist financing. In October 2003, Goh and the visiting President Bush agreed that

the two governments would enter into negotiations for a Framework Agreement for

the Promotion of a Strategic Cooperation Partnership in Defence and Security, which

is aimed at expanding the scope of bilateral security cooperation in counterterrorism

and counter-proliferation of weapons of mass destruction (WMD), among other

things. The agreement was signed in July 2005.

Singapore's inclination to strengthen its security partnership with the U.S.,

however, should not be confused with the "balancing strategy" in international

relations theory, which refers to the act of aligning with a third country to form a

military alliance to counter the growing threat of a specific big power. While it is true

that Singapore does choose to side with the U.S. to forge a military alignment, this

partnership is aimed at preparing for strategic contingency in general, i.e. the

possibility that China - or for that matter, any other big powers or non-state actors -

may turn aggressive and disrupt the regional status quo. This feature means that the

security partnership should be regarded as "indirect" and not a pure form of

balancing. If Singapore's strategic posture is one of classic balancing specifically

targeted at China, the city republic would not have allowed the Chinese naval ships to

visit its Changi base.

Like all other ASEAN states, Singapore considers pure balancing as

Fight Against Terror: Singapore's National Security Strategy (Singapore: National Security
Coordination Center, 2004).
strategically unnecessary because the Chinese threat has remained largely potential

rather than actual. Pure balancing is also viewed as politically provocative and

counter-productive, in that an anti-Beijing alliance will certainly push China in a

hostile direction, turning a perceived threat into a real one. Further, pure balancing is

regarded as economically unwise, as it is likely to result in the loss of lucrative trade

opportunities that could be garnered from China's growing market.

For these reasons, while Singapore leaders recognize the importance of

"maintaining balance", they do not make indirect-balancing the only thrust of their

China policy. In fact, as already discussed, Singapore's strategy has also entailed a

policy of binding-engagement. This can be observed by its persistent efforts to

include and integrate China into various regional and inter-regional multilateral

institutions, such as the ARF, CSCAP, the Asia-Europe Meeting (ASEM), and the

Forum for East-Asia-Latin America Cooperation (FEALAC). Goh Chok Tong

remarks, "A prosperous and globally integrated China is in our interests. The

alternative of a poor and isolated China ... will pose challenges without the

opportunities." 66

Over the period 1996-2003, the expanding multilateral interactions between

China and regional countries at the three ASEAN-based regional institutions - i.e. the

ARF, the ASEAN-China dialogue, and the ASEAN Plus Three (APT) - contributed

to several developments that were generally welcomed by Singapore and ASEAN

states.67 These included the signings of the ASEAN-China Free Trade Area (ACFTA)

framework agreement and the Declaration on Conduct of Parties in the South China

Sea (DoC) in 2002, as well as China's accession to ASEAN's Treaty of Amity and

66
Goh Chok Tong, "Challenges for Asia," speech delivered at the Research Institute of Economy,
Trade and Industry (RIETI) Special Seminar, Tokyo, March 28, 2003.

67
Kuik Cheng-Chwee, "Multilateralism in China's ASEAN Policy," Contemporary Southeast Asia
27:1 (April 2005), pp. 102-22.

333
Cooperation (TAC) in 2003. 68 To Singapore's ruling elites, ACFTA was

economically valuable in that the creation of an economic region of 1.7 billion

consumers with a combined GDP of US$2 trillion free trade area would help

Singapore to mitigate its economic vulnerability by pooling resources and combining

markets, whereas the DOC and TAC were significant in security and political terms,

by reducing the possibility of conflict in the South China Sea and by contributing to

the status quo elements of China's security behavior.

While utilizing the ASEAN-based regional institutions as a platform to engage

and to bind China, Singapore has also attempted to use the same institutions to

develop multifaceted relations with other big powers like the U.S., Japan, and India.

Beyond the diplomatic front, Singapore has simultaneously invested in

keeping and developing new strategic ties with various power centers. It has

continued to participate in the Five Power Defence Arrangements (FPDA). The

Singapore Armed Forces (SAF) enhanced Singapore-Japan defense ties in 1997 with

the inauguration of bilateral policy talks. 69 Singapore and India signed a defense

cooperation agreement in 2003, and the two countries have engaged in joint naval

exercises.

Phase III (2004-Present):

Institutionalizing a Correct and Calculated Relationship

Singapore-China relations dropped to its lowest ebb in July 2004, following the then

Deputy Prime Minister Lee Hsien Loong's "private and unofficial" visit to Taiwan

from July 10 to 13, which triggered off vehement reactions from China. Beijing

claimed that the visit had hurt China's "core interests" and undermined the "political

M
Etel Solingen, "From 'Threat' to 'Opportunity'? ASEAN, China, and Triangulation," in Evelyn Goh
and Sheldon W. Simon, e d s , China, the United States, and Southeast Asia: Contending Perspectives
on Politics, Security, and Economics (New York & London: Routledge, 2008), pp. 17-37.

69
Government of Singapore, Defending Singapore in the 21s' Century (Singapore: Ministry of Defence,
January 2000), p. 19.

334
foundation" of Sino-Singaporean relations. It then called off the Governor of the

People's Bank of China's scheduled trip to deliver the Monetary Authority of

Singapore (MAS)'s annual lecture, and stalled many other bilateral cooperative

activities. Although this public uproar quickly subsided after Lee Hsien Loong (who

became Singapore's third prime minister on August 12, 2004) reassured China of

Singapore's commitment to the "One China policy", this spat seemed to have

deepened PAP leaders' apprehension about the possible ramifications of an

increasingly powerful China.

In a policy report analyzing China's reactions to Lee's visit, three researchers

at the prominent government-linked East Asian Institute (EAI) wrote:

... with China's phenomenal economic growth along with the relative economic
decline or stagnation of its neighboring economies in the aftermath of the Asian
financial crisis, China's old Middle Kingdom syndrome vis-a-vis its neighbors seems
fast re-emerging. More and more, the ASEAN countries will be seeing the rise of a
much more assertive and more confident China. Although this does not necessarily
follow that China will be throwing its weight around in the region on all issues,
China can be veiy unforgiving when its smaller Asian neighbors step on its toes over
its core national issues.7

This deepening apprehension notwithstanding, the pragmatic PAP elites were

well aware that, given the increasing economic importance of China as well as its

growing influence in regional and world affairs,. Singapore simply has to find ways to

develop a close working relationship with Beijing.

Against this backdrop, efforts were made to enhance bilateral cooperation by

further institutionalizing various dialogue and coordination bodies between the two

countries. Chief among these was strengthening the roles of the annual vice-premier

level Joint Council for Bilateral Cooperation (JCBC) as the highest coordinating

mechanism to promote collaboration in political and economic areas. The joint

70
John Wong, Zheng Yongnian, and Tok Sow Keat, China's Reaction to DPMLee Hsien Loong's Visit
to Taiwan, EAI Background Brief No. 206 (Singapore: East Asian Institute, National University of
Singapore, August 2004).

335
council, created in November 2003, was structured to oversee seven business and

collaborative councils that extend from the north to south of China in partnership with

Singapore. The inaugural meeting was held in May 2004 in Beijing; the second in

September 2005 in Singapore; and the third in August 2006 in Beijing. It was at the

2006 JCBC meeting that the leaders of the two sides agreed to initiate negotiations for

the China-Singapore Free Trade Agreement (CSFTA). After eight rounds of

negotiations, the CSFTA was signed on October 23, 2008. It entered into force on

January 1, 2009. The fourth JCBC meeting in July 2007 discussed the idea of the

"eco-city project", as mooted by Senior Minister Goh Chok Tong in April that year.

On November 18, 2007, the two countries signed the Framework Agreement on the

Development of an Eco-city in the PRC, to jointly develop a green urban community

in Tianjin.

In addition to JCBC, the two governments also established the ministerial-

level Singapore-China Joint Investment Promotion Committee (IPC) in May 2005,

with the goal of further promoting bilateral investment links. The inaugural IPC

meeting, held in Beijing in January 2007, identified three key collaborative areas: (a)

helping Chinese companies "go global" by encouraging them to set up their regional

hub and list in Singapore; (b) facilitating more Singapore investments into the priority

sectors of water and environmental engineering, healthcare, education and insurance

in China; and (c) exploring closer economic cooperation in China's new growth

regions around the Bohai Rim, such as Tianjin and Liaoning.71

It must be noted that institutionalized mechanisms such as JCBC and IPC are

mainly platforms for economic-pragmatism and binding-engagement policies on the

part of the PAP government, but they are by no means a manifestation of limited-

71
Singapore's Ministry of Trade and Industry, "Singapore-China Investment Ties to Strengthen with
New Areas of Cooperation," January 25, 2007. Available at
http://app.mti. gov.sg/default.asp?id=148&articleID=6641

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bandwagoning. Thus far, the agendas set forth in these bilateral collaborative

institutions have been chiefly confined to economic and functional areas; they do not

venture into any concrete aspects of foreign policy and security cooperation - at least

not in any way similar to the Malaysia-China partnership in promoting East Asian

cooperation. As mentioned earlier, largely because of the PAP elites' geopolitical

consideration of not wanting to be seen as a "third China" by its two larger Muslim-

dominated neighbors, the government has been consciously avoiding any move that

might be interpreted as promoting China's interest in the region. For this reason, there

would always be "a self-imposed limit" on the part of Singapore as to the extent in

which it can forge political cooperation with Beijing. 72 Hence, bandwagoning

behavior, even in limited form, is still a non-starter for Singapore government.

Under the current structural conditions, the pragmatic PAP ruling elites must

have reckoned that it is economically rewarding, politically fitting, and strategically

instrumental for Singapore to develop a "correct" relationship with China,73 in a way

that would avoid arousing suspicion from its neighbors that it is forging any undue

political partnership with Beijing, but would still allow Singapore to well-position

itself to capture whatever present and future benefits that can be garnered from its

multifaceted and multilevel cooperative relations with the increasingly powerful giant

neighbor.

Singapore's present policy is economically sufficient in that, even without

forging a political alignment with Beijing, the existing bilateral and multilateral

arrangements are already functionally adequate enough to allow it to pursue its

economic goal of expanding its trade and investment links with China.

72
Yuen Foong Khong, "Singapore: A Time for Economic and Political Engagement," p. 119.

73
On Singapore elites' pragmatic calculations vis-a-vis China, see Tan See Seng, "Riding the Chinese
Dragon: Singapore's Pragmatic Relationship with China," in Jun Tsunekawa, ed.. The Rise of China:
Responses from Southeast Asia and Japan (Tokyo: The National Institute for Defense Studies, 2009),
pp. 21-45

337
 Political wise, Singapore's seemingly paradoxical policy of externally

downplaying ethnic affinity in Singapore-China relations but internally encouraging

its citizens to learn more about Chinese culture is considered correct and appropriate,

because the approach allows the government to take care of geopolitical sensitivities,

while still appealing to some of its ethnic Chinese voters who demand to conserve

their cultural roots. In addition, the policy of encouraging Singaporeans to become

fluent in Mandarin also serves the economic purpose, at a time when the government

is increasingly eying to get a larger slice of China's fast expanding economic pie. In

2007, the government supported the Singapore Chinese Chamber of Commerce and

Industry (SCCCI)'s move to set up the "Business China" Club, whose target members

included businesspersons, professionals, young entrepreneurs and students keen on

China to network and converse in Mandarin. In addition, the government has also

been conducting various "non-political" short-term courses that entail long-term

political significance. These included Chinese Mayors' Study Visit Program, Senior

Chinese Officials Study Visit Program, Sino-Singapore Undergraduate Exchange

Program, which are in part aimed at offering opportunities for officials and future

leaders of the two countries to network each other.

Strategically, Singapore's China policy is instrumental because by insisting on

a no-bandwagoning stance vis-a-vis the rising power, it serves to highlight

Singapore's determination to safeguard its autonomy before the regional audience and

indeed, all the major powers, thereby increasing its policy leverage toward the outside

world.

Such a correct and calculated relationship with China constitutes Singapore's

"heavy hedging" posture, enabling the smaller state to fully explore China's economic

potentials while still upholding its sacrosanct autonomy and policy maneuverability.

338
 Conclusion

The above discussion indicates that Singapore's policy toward China is, by design, a

highly ambivalent one: warm in economic and diplomatic ties but distant in the

political and strategic spheres. A domestic legitimation explanation is that close

economic and diplomatic ties with China would help mitigate Singapore's economic

and security risks by facilitating sustainable economic vitality and by ameliorating the

revisionist element in China's behavior, both of which are central to the PAP

government's political foundation. However, a close political and strategic

partnership would only produce more risks for the "little red dot" by inviting

suspicion from its immediate neighbors. Keeping a political distance from China, by

contrast, would help to project Singapore's independence and credibility in the eyes

of its neighbors and external powers.

Mindful of the possible undesirable implications of a powerful China,

Singapore's engagement policy has gone hand-in-hand with an approach that can be

described as "dominance denial." This is a policy that is aimed at preventing and

denying the emergence of a predominant hegemon by using the presence of other

powers as a countervailing force to offset the growing clout of the potential hegemon.

Empirically, Singapore's dominance denial policy is evidenced by its efforts to ensure

the involvement of different powers - not only the U.S. and Japan, but also the

emerging India - in regional affairs. Since Singapore and its ASEAN partners are

aware of the limitations of their own ability to guarantee an effective engagement

policy, the presence of other powers is deemed essential to induce China to stay on

the engagement course. Dominance denial and engagement, thus, can be seen as two

sides of the same coin.

In short, Singapore's China policy is constituted by four pillars: economically,

a pragmatic approach to maximize commercial benefits; diplomatically, an

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engagement policy to integrate the big power into the ASEAN-led regional

institutions; politically, a dominance-denial position to prevent China from evolving

into an unchecked hegemonic power; and strategically, an indirect-balancing stance to

prepare for a situation if engagement failed. By adopting these measures in their

dealing with China, Singapore leaders seemed to have placed more emphasis on risk-

contingency options than reward-maximizing options. Such a "heavy hedging"

approach, in effect, distinguishes Singapore's China policy from that of Malaysia's

"light-hedging" approach, which places roughly equal emphasis on both risk-

contingency options (indirect-balancing and dominance-denial) and reward-

maximizing options (binding-engagement and limited-bandwagoning).

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 CHAPTER 9

A RETURN TO THEORY:
EXPLAINING SMALLER STATES' ALIGNMENT CHOICE
IN THE FACE OF A RISING POWER

"... right, as the world goes, is only in question between equals in power, while the
strong do what they can and the weak suffer what they must."
Thucydides, The History of the Peloponnesian War,
Book V, "The Melian Dialogue "

"[A] prince ought never to throw in his lot with one more powerful than himself in an
aggressive cause, unless sheer necessity compels him. In case of victory, he remains
the prisoner of that stronger ally. And princes ought to avoid at all costs placing
themselves at the mercy of others. ... Nor should any state believe that it can enter
into any such venture and alliance with complete assurances as to the outcome;
rather, it ought always to consider carefully all the dubious possibilities. For this is
the order of things. To avoid one danger without exposing oneself to another is
impossible. Prudence consists rather in knowing how to weigh the various perils
involved, and to choose the less harmful as the good."
Niccolo Machiavelli, The Prince, Chapter XXI

This concluding chapter performs three major tasks. First, it sums up the main

argument and the key findings derived from the earlier chapters, which set forth the

parameters for analyzing the features, factors, and conditions of smaller states'

alignment behaviour in the face of a rising power as a phenomenon in international

relations. Second, on the basis of the empirical observations drawn from the two case

studies of Malaysia and Singapore's response to a rising China in the post-Cold War

era, this chapter seeks to revisit our theoretical discussion, by analyzing the

explanatory strengths of neorealism and the Domestic Legimation Model in

accounting for the variation in the two states' hedging behavior. Third and finally, the

chapter acknowledges the limitations of the study and suggests the direction for future

research.

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 Central Argument and Key Findings

This is a study about the dynamics of managing power asymmetry as an enduring

central phenomenon in world politics, as seen from the perspective of smaller states.

Specifically, it focuses on two similarly-situated smaller states' reactions to a rising

and proximate big power, enquiring how and why they choose to "manage" the

asymmetric relationships the way they do. The findings of the study suggest that,

contrary to what mainstream International Relations (IR) theories would have it,

smaller states often do not have to choose between balancing and bandwagoning;

rather, under the conditions of high-uncertainties and high-stakes in the face of a

rising power, smaller states tend to exhibit different degrees of "hedging" behavior,

which, in essence, is a two-pronged approach of maximizing economic and

diplomatic returns when things are fine and dandy, while simultaneously preparing for

strategic contingency options in order to mitigate the long-range political and security

risks surrounding the astounding rise of a big power in close geographical proximity.

The fact that the two similarly-situated states have demonstrated dissimilar degrees of

hedging behavior towards the same rising power - despite the more or less identical

structural conditions they are confronted with - indicates that while the structural

forces of looming uncertainty amid the shifting distribution of regional power do

compel the smaller states to similarly opt for hedging (over the more clear-cut

strategies of balancing and bandwagoning), it is the dissimilar domestic factors that

have driven them to hedge differently. This finding, along with other observations

developed in Chapters 5-8, lead us to argue that the substance of smaller states'

strategies vis-a-vis a rising power is not determined by their concerns over the

growing power gap per se; rather, it is a function of domestic legitimation through

which the ruling elites seek to capitalize on the dynamics of the rising power for the

ultimate goal of justifying their own political authority at home.

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 This main argument is premised upon the following key findings and

supporting themes, as derived from the discussions in Chapters 1-8:

Key Findings and Supporting Themes

1. Smaller states' behavior is fundamentally different from that of big powers, in

that unlike the latter who are prone to struggle for power by trying to dominate

others whenever they can (the drive for power maximization), the former -

due to their innate vulnerabilities as a result of their limitations in size and

strength - are constantly preoccupied with their own struggle for survival (the

imperative for self preservation). [Chapter 1]

2. Because of their inherent vulnerabilities as well as their inability to cope with

a multiple of security, economic, and political risks (the "trinity of risks") by

their own efforts, smaller states must necessarily enlist external assistance -

from big powers, regional countries, and/or multilateral institutions - in order

to augment their inadequacy and ensure their own survival in an anarchic

international system. [Chapters 1-2] The manner and the extent to which

Malaysia and Singapore have repeatedly (albeit selectively) turned to the

Western powers and ASEAN for mitigating different forms of existential risks

is a clear testimony to this. [Chapters 5-8]

3. These situational features - i.e. the innate vulnerability and the resultant

necessity to enlist external assistance to mitigate the trinity of existential risks

- more often than not, tends to pose a structural trilemma for smaller states,

not least because the nature of the trinity is such that a state cannot hope to

rely on one single policy option to independently mitigate all three risks, and

343
 that regardless of which option a state chooses to adopt, its attempt to use that

approach to mitigate certain risks will inevitably expose it to other form of

dangers. Take alliance. While joining a big power-led alliance will allow a

smaller state to reduce security threats and make economic gains (through

developmental aid and taking advantage of the security umbrella to

concentrate its resources for internal development), the option will nonetheless

expose the state - as the junior and weaker partner - to various forms of

political risks, such as incurring domestic opposition, eroding sovereignty,

limiting maneuverability, and antagonizing another big power. The option of

institutionalized cooperation, on the other hand, despite its virtues of

enhancing a smaller state's capacity to reduce economic risks (through

expanding economic links and diversifying its export markets) and avoid the

undesired political outcome of subordinating to an external power, has the

downside of being ineffectual for tackling a security threat. These mean that

there are policy trade-offs in smaller states' effort to mitigate the trinity of

risks. Of the three policy goals that smaller states typically seek to pursue -

security and freedom from military threat, prosperity and freedom from

economic deprivation, sovereignty and freedom from autonomy infringement

- only two can be attained by a single option. [Chapter 2]

4. These trade-offs have implications for smaller states' alignment choice.

Because the security and economic benefits of alliance more often than not

can only be acquired at the expense of certain political values, "balancing"

(forming or joining alliance with other like-minded countries to counter a

rising power and/or a growing threat) and "bandwagoning" (joining alliance

with a rising power) are rarely the first policy choice for smaller states; rather,

344
 they are at best the second option that will be chosen only under certain

conditions, such as when a smaller state is threatened by a direct and

immediate military danger that it cannot cope by itself. [Chapter 3] Similarly,

because the option of institutionalized cooperation is unable to provide a

reliable security guarantee to smaller states, it is often pursued in conjunction

with some forms of military arrangements, often by aligning with other

militarily stronger power(s) without forming a formal military alliance. This is

evidenced by Malaysia and Singapore's external policies since the 1970s.

Despite their declared policy of using ASEAN (an institutionalized

cooperation among a group of neighboring countries) as the cornerstone of

their foreign policies, the two smaller states have both chosen to maintain and

develop their "informal" military ties with the Western powers as a way to

strengthen their security position. [Chapters 5-8]

5. Considering the empirical record that smaller states can choose to align with a

big power without forming a military alliance, a conceptual distinction must

be made between "alliance choice" and "alignment choice". That is, the

former should be viewed as a part of a state's alignment behaviour, which

refers to a state's choice to position itself vis-a-vis other state-actors,

especially those who exist and act as the power poles of the international

system. A state's positional choice - which may or may not overlap with its

openly declared stance - is discernible from the manner in which it employs

the tools of statecraft vis-a-vis a big power. These tools encompass not only

military alliance and armament, but also a wide array of non-military options

that include all forms of political partnership, diplomatic rapprochement,

functional collaboration, and economic cooperation. [Chapter 3]

345
6. This enlarged conception of "alignment choice" logically prompts us to

conceive smaller states' big power strategy not as a dichotomy of "alliance or

no-alliance", but as a spectrum of policy options between two extreme

positions of "power rejection" (i.e. balancing) and "power acceptance" (i.e.

bandwagoning). Each of these policy options - which may take the form of

formal or informal military cooperation, power balancing, multilateral

diplomacy, foreign policy partnership, etc - reflects different degrees of

power-rejection and power-acceptance vis-a-vis the big power, with economic

pragmatism representing a neutrality point. [Chapters 3-4] This conception

leads us to trace and compare Malaysia and Singapore's evolving policies

toward China over the past decades, by observing the manner in which the two

states have, at different junctures, sought to use different combinations of

military and non-military options that reflect the individual state's changing

inclinations to counter-check, neutralize, accommodate, and/or utilize the

growing power of the neighboring giant. [Chapters 5-8]

7. An empirical look at these changing inclinations suggests that neither

Malaysia nor Singapore is adopting pure-balancing and pure-bandwagoning

vis-a-vis China. This is evidenced by the fact that, on the one hand, none of

the smaller states has formed an alliance that is specifically and explicitly

targeted at China, and that none of them is pursuing a military modernization

program that is accelerated in tandem with the growth of China's military

power. On the other hand, there is also no evidence indicating that these

smaller states are showing subordination to or accepting a hierarchical

relationship with the rising power. Instead, the fact that the two smaller states

346
 have both taken a middle position (between pure-balancing and pure-

bandwagoning) by adopting a bundle of two-pronged policies suggest that

they are pursuing a hedging approach. [Chapters 7-8] The approach is

described as hedging in that while the smaller states have adopted policies

aimed at maximizing economic and diplomatic benefits from the rising power,

they have also taken some opposite and counteracting measures that are aimed

at keeping all options open to offset and cushion against any potential long-

range political and security risks surrounding the rise of the big power.

[Chapters 3-4]

8. The observation that the two smaller states are not adopting pure-balancing

and pure-bandwagoning but pursuing a hedging approach raises the question

of what are the prevailing conditions that have induced hedging behavior. Two

conditions stand out, i.e. "high-stakes" and "high-uncertainties".

The situation is one of high-stakes, because this whole issue of aligning with

or aligning against a rising and proximate big power is a highly consequential

matter for all smaller states adjacent to the giant. Given the power's capability

superiority and geographical proximity, smaller actors are all mindful that the

giant next door can both be a source of a problem and a source of assistance

that could make or break (or at least obstruct or complicate) their own quest

for survival. The security and political problems created by Red China to

Malaysia and Singapore throughout the 1950s and 1960s, as well as the

growing economic benefits from China's vast and expanding market after the

1980s, clearly illustrate how China can be a profoundly ambivalent and

permanent factor to its neighboring smaller countries. [Chapters 5-6]

347
On the other hand, the situation is also one of high-uncertainties. To begin

with, the fluctuations in power structure at the international level - i.e.

changes in the distribution of capabilities and commitments across the big

powers - are a regular feature of political life (much in the same way as

fluctuations in prices an inevitable phenomenon in the economic sphere).

Smaller states are concerned about fluctuations in power structure, chiefly

because any major change in big powers' relative capabilities and/or strategic

commitments are bound to affect their external environment, often by

increasing the security and political risks they face. A case in point was

Malaysia and Singapore's situation in the late 1960s after the British East of

Suez pullout and the U.S. retreat from Indochina. [Chapters 5-6]

The problem for smaller states is that, while they know that power structure

will inevitably fluctuate at some point, there is no way they can predict how

and when this will take place. This unpredictability is in part because the

distribution of power is a systemic process that cannot be determined by any

single actor, especially in the face of a rising power. A rising power may

continue to rise, but it may also fall in due course. An established power may

go through a relative decline, but it may also re-emerge and continue to enjoy

global supremacy for extended decades. The uncertainty in relative

capabilities among the big powers is further compounded by the uncertainty in

the powers' strategic commitment. For instance, a big power may reduce its

commitment to a certain region - particularly those far away from its "natural

backyard" - either because of domestic political pressure, financial strain, or

strategic adjustment. Whatever the reasons, the unpredictability in the

348
hegemon's existing commitment would mean for smaller states that the

"security guarantees" of their big power patron will always be uncertain, if not

unreliable. Hence, there will always be a fear of abandonment on the part of

smaller actors. At the same time, the unpredictability in big powers' relative

capabilities would mean that there will always be a fear of backing the wrong

horse and anxiety about being entrapped in inter-great-power conflicts that

they did not choose. Due to these fears of entrapment and abandonment as

well as the concerns about placing the wrong bets, smaller states - if they can

- would prefer to avoid taking side, and would avoid making speculations

about the future of inter-great-power relations. [Chapter 4]

Under the conditions of high-stakes and high-uncertainties, thus, smaller states

as rational actors are not likely to place all eggs in a basket. They are not

likely to opt for balancing (siding with an established hegemon to balance

against a rising power) and bandwagoning (siding with a rising power); rather,

when the stakes are high and situation uncertain, smaller actors are more likely

to adopt a two-pronged approach such as hedging, which enables them to

avoid the undesired politico-strategic risks of sticking to one single power,

while trying to get the best of both worlds for as long as the structural

conditions allow them to do so. That is, so long as the inter-great-power

relations are stable enough to not compel the smaller actors to take sides, and

so long as there is no immediate security threat that will make military alliance

a necessary option, smaller states are likely to stick to their hedging position,

as demonstrated by Malaysia and Singapore's two-pronged approach towards

the big powers throughout the post-Cold War era. [Chapters 7-8]

349
9. The above structural conditions, however, only explain why the smaller actors

are more inclined to adopt a hedging approach; they do not explain why they

have chosen to hedge differently. For example, structural factors do not

explain why Malaysia has adopted limited-bandwagoning vis-a-vis China

whereas Singapore has rejected it; and they do not explain why, despite the

two countries' common desire to maintain military links with the U.S., it is

only Singapore, and not Malaysia, who has taken a vocal and high-profile

approach to advocate for the continuing presence of the U.S. in the region.

As shall be elaborated in the next section, the variations in the two smaller

states' hedging approach, however subtle they might be, have a lot to do with

factors at the domestic level. Specifically, it is due to the considerations

related to the respective ruling elites' domestic legitimation - the political

necessity of capitalizing on different facets of their country's relations with

different big powers for the ultimate goal of consolidating and justifying their

domestic rule - that the two smaller states have chosen to pursue the type of

hedging approach the way they have, by downplaying or highlighting a certain

risk and benefit from a particular big power. For instance, because of the

growing importance of China as a key economic and foreign policy partner for

the Barisan Nasional (BN) ruling elites' efforts to ensure their performance

legitimacy, to underscore Malaysia's independent status, and to project the

government's image as a spokesperson for the Third World, the Malaysian

government has carefully downplayed any potential security challenges that

might be posed by an increasing powerful China, their overlapping territorial

claims in the Spratlys notwithstanding. In a similar vein, because of the

growing political importance of competing with its arch rival Islamist PAS in

350
 winning the support of the conservative Malay-Muslim electorate who are

increasingly critical of the United States' policies in the Islamic world, the

UMNO-led government has downplayed the existence of the close military

cooperation between the two countries,1 and dismissed any possibility of

forming an alliance relationship with the world's lone superpower, the

profound security benefits notwithstanding.

In the case of Singapore, chiefly driven by the People's Action Party (PAP)

government's desire to avoid inviting suspicion from the island-state's two

larger Muslim-majority neighboring countries that may distract its efforts to

ensure economic growth and performance legitimacy, the Singapore

government has chosen to downplay any ethnic-affinity in the Singapore-

China relations, and keep a political distance from Beijing. [Chapters 7-8]

Domestic Legitimation and Foreign Policy Choice:

Explaining Malaysia and Singapore's Response to a Rising China

Based on the discussion in the preceding chapters, it can be concluded that Malaysia

and Singapore's response to a rising China cannot be adequately explained by the

mainstream neorealist propositions.

Neorealism predicts that a change in the distribution of regional and global

power - in this case, an increase in China's relative capabilities since the 1990s - is

likely to induce a greater level of apprehension on the part of the smaller states and

compel them to pursue internal and external balancing acts (i.e. military alliance and

armament) for counter-checking the rising power, in an effort to maximize their own

security and ensure their survival in an anarchic international system.

1
Mak Joon Nam, "Malaysian Defense and Security Cooperation: Coming Out of the Closet," in See
Seng Tan and Amitav Acharya, eds., Asia Pacific Security Cooperation: National Interests and
Regional Order (London: M.E. Sharpe, 2004), pp. 127-53; Barry Wain, Malaysian Maverick:
Mahathir Mohamad in Turbulent Times (London: Palgrave Macmillan, 2009), pp. 250-2.

351
 This proposition is only partially correct for the two cases under study. It is

true that at a time when China increases its power, Malaysia and Singapore are also

seen upgrading their own defense capabilities as well as maintaining and

strengthening their respective defence cooperation with the Western powers,

particularly the United States. However, the empirical evidence as discussed in

Chapters 7-8 indicates that Malaysia and Singapore's defense modernization

programs are not developed and accelerated in tandem with the growth of China's

military power. The empirical observations also suggest that their military

cooperation with Western partners is motivated more by the states' desire to prepare

for diffuse contingency and strategic uncertainty in the post-Cold War environment,

than by a threat perception that is specifically focused on China.

Indeed, the fact that the leaders of both these smaller states do not explicitly

identify any country as a source of the threat, and the fact that they have tended to rely

more on non-military approaches like multilateral institutions as a means to constrain

and socialize the rising power while simultaneously trying to make economic and

diplomatic benefits from the giant neighbor, are all clear indicators that Malaysia and

Singapore's present strategies are qualitatively different from the traditional, classic

form of balancing behavior as prescribed by neorealism. Specifically, the smaller

states' present strategies - which we describe as hedging - is different from pure-

balancing in at least two accounts. In terms of function, pure-balancing is mainly

about threat-minimizing, whereas the two states' hedging behavior is aimed at the

concurrent goals of risk-contingency and return-maximizing. In terms of modus

operandi, pure-balancing involves mainly military measures (alliance and armament),

whereas hedging involves a wide range of military and non-military options, such as

bilateral diplomatic endeavours, multilateral institutions, and balance-of-influence (or

balance-of-political-power).

352
 Accordingly, while neorealism is certainly correct in arguing that an increase

in a big power's relative capability is likely to induce smaller states - especially those

in the adjacent area - to adopt strategic contingency measures that are aimed at

counterchecking the rising power, this assertion only tells half the story. It does not

tell us that smaller states may choose to counter-check a big power with political and

diplomatic options, and not just military means. It also does not tell us that smaller

states may seek to counter-check a power while concurrently seeking to benefit from

it. Neorealism, therefore, does not sufficiently capture the range of state actions and

functions in the face of a rising power. Balance-of-power is not all about balancing

(and its antithesis, bandwagoning); it may take other less clear-cut manifestations,

such as hedging.

This is not to argue that neorealism is no longer relevant in explaining state

responses to a rising power. Rather, it merely suggests that the paradigm is more

useful in accounting for a situation where states are confronted by an immediate and

imminent security threat. In circumstances where a states' security is not directly

threatened by a big power - as in the case of Malaysia and Singapore's relations with

China during the post-Cold War era - the smaller states could afford to stress other

state goals like economic growth, regional stability, and foreign policy prestige, and

are allowed to take a more flexible position vis-a-vis the rising power.

The limitations of neorealism also lie in its inability to explain the variation in

the smaller states' responses to the rise of a big power - i.e. why certain smaller actors

have chosen to move closer to a rising power than others. As discussed in Chapters 7-

8, the growth of China's relative capability during the post-Cold War era has induced

Malaysia to move closer to China by embracing the elements of limited-

bandwagoning; but the very same structural forces clearly did not result in the same

outcome for Singapore. Hence, contrary to what neorealism has stressed, an increase

353
in a big power's relative capability may not necessarily induce apprehension on the

part of smaller states; it may also induce attraction. It follows that structural factor (a

change in the distribution of power) per se has no inherent consequence on state

behavior. There are other unit-level factors that may have caused the states to react to

the growth of China's power in the way they do. The centrality of domestic factors

is reinforced by the puzzling fact that, it is not Singapore but Malaysia, who is more

inclined to accommodate and utilize China's growing power. Considering Malaysia's

past problems with China over Beijing's "dual-track" practice and the Overseas

Chinese policy, as well as their unresolved disputes over the Spratlys as mentioned in

Chapters 5-7, one would expect Malaysia to be more wary about China's growing

capability than Singapore, who, by contrast, does not have any overlapping territorial

claims with Beijing and is geographically farther from the giant. These historical and

contemporary factors could have been forceful enough to compel Malaysia to reject -

rather than to accept and accommodate - China's growing power. The empirical

record as elaborated earlier, however, reveals just the opposite.

This is where the Domestic Legitimation explanation comes in. By focusing

on the big power role in the ruling elites' inner justification efforts, the Domestic

Legitimation Model highlights that it is the ruling elites' differing pathways to

legitimacy that explain the variation in the two states' behavior. Put differently, it is

the distinctive sources through which the respective elites seek to justify, enhance,

and consolidate their own domestic authority that have driven Malaysia and

Singapore to pursue the sort of hedging behavior the way they have.

In the case of Malaysia, the substance of its China policy mirrors the key

sources of the BN government's political foundation. They are, among others, the

promotion of Malay ethnic dominance, economic performance, an all-inclusive

nationalist vision, electoral process, as well as national sovereignty and international

354
standing. Pursuing a pure form of bandwagoning (an across-the-board alignment and

an acceptance of hierarchical relations) is a non-starter for the Malay-dominated

regime, as the option is likely to result in an imbalance in domestic political

configuration and an erosion of external sovereignty. The limited form of

bandwagoning, however, is desirable and in fact vital for the BN government. Given

Malaysia's multi-racial structure, a politically significant economic performance

requires the ruling elite to concurrently attain the objective of improving the economic

welfare of Malay and enlarging the overall economic pie for the non-Malay groups.2

In this regard, a closer relationship with Beijing is crucial for the Malaysian elite not

only because it boosts bilateral trade and investment flows, but also because China's

support will strengthen Malaysia's ability to promote a new economic order for East

Asia, with the ultimate goal of reducing the risks of volatile global economy on its

national economic performance. This ambition, if materialized, is expected to elevate

Malaysia's regional and international standing - itself an important source of

authority for BN that, along with other legitimation pathways, helps to consolidate its

electoral base. Hence, a pure form of balancing against Beijing is not only

unjustifiable, but also harmful to BN regime interests because such an option would

call for a full-fledged alliance with the U.S., which is likely to reduce the credibility

of the BN's claim of pursuing an "independent" external policy for Malaysia.

In the case of Singapore's China policy, its choice to reject limited-

bandwagoning despite a firm enthusiasm for binding-engagement and economic-

pragmatism is best explained by the very foundation of the PAP elite's political

power, i.e. an ability to cope with the island-state's inherent vulnerability. An

economically close and diplomatically cordial relationship with China serves to attain

this goal (by facilitating sustainable economic vitality and regional stability), but a

2
Joseph Liow Chinyong, "Malaysia-China Relations in the 1990s: The Maturing of a Partnership,"
Asian Survey 40:4 (July/August 2000), p. 676.

355
strict sense of political and strategic partnership would not. Rather, any

bandwagoning posture with China would only increase Singapore's vulnerability by

undermining its very foundation of multiculturalism and inter-ethnic relations, and

externally creating suspicions from its two larger neighbors - Indonesia and Malaysia.

For a "little red dot" that has been viewed as a Chinese island in a Malay sea, such a

scenario is likely to destabilize Singapore's immediate environment and divert the

PAP elites' attention from the otherwise more crucial domestic economic functions.

To conclude, a rising power's growing relative capabilities only constitute

structural forces that smaller states must respond to, they do not by themselves

determine the states' alignment decisions; rather, the substance of the smaller states'

reactions is a function of domestic legitimation through which the respective elites

seek to capitalize on the dynamics of the rising power for the goal of justifying and

enhancing their own authority at home.

Limitations of the Study and Direction for Future Research

This dissertation represents a preliminary study of smaller states' alignment choices in

the face of a rising power in the twenty-first century world politics. For feasibility

reasons, the study has focused on Malaysia and Singapore's responses to a rising

China, as an instance of how and why similarly-situated smaller states respond to a

rising and proximate power the way they do. On the question of "how", the study has

attempted to go beyond the dichotomous debate between balancing and

bandwagoning, arguing that smaller states often do not have to choose between these

two strategies; and that under the conditions of high-stakes and high-uncertainties

characterizing the post-Cold War environment, smaller states are more likely to opt

for mixed strategies like hedging. Such an approach is of significance for policy

356
analysis. Given that very few states adopt pure forms of balancing or bandwagoning

vis-a-vis China, conceptualizing hedging as a spectrum of policy options between two

extreme ends of power-rejection and power-acceptance is a more realistic way to

observe the change and continuity in state strategies over time. Specifically, it allows

policy analysts to ponder the possibility, direction, and conditions of a horizontal shift

along the spectrum, thereby contributing to the ongoing debate over China's rise and

providing useful pointers for systematically studying the patterns of smaller states'

strategic choices amid the evolving power structure in the twenty-first century. On the

question of "why", the study has attempted to highlight the causal links between

ruling elites' domestic political necessities and a country's alignment choice. .This

approach allows researchers to focus on domestic determinants as a source of foreign

policy behavior, thereby helping to bridge the disciplinarily artificial and analytically

misleading "divide" between International Relations and Comparative Politics.

Having said that, there are two limitations need to be acknowledged here. The

first concerns the issue of case selection. Ideally, a comparative study that seeks to

address the research question at hand should include as many comparable and

significant cases as possible, in order to provide an analysis that is comprehensive,

representative, and theoretically stimulating. This perhaps requires the researcher to

include not only other key ASEAN countries like Indonesia, Thailand, and Vietnam,

but also other smaller countries in the sub-regions of Northeast Asia, South Asia, and

Central Asia, who are similarly faced with the myriad challenges and opportunities

brought by a rising China. Future research may include more cases from these sub-

regions. Although increasing the number of cases will increase the time and effort

required, such a cross sub-regional study may allow researchers to identify other

potentially important explanatory variables that are either absent or dissimilar to those

that exist in Southeast Asia. Examples are the role of the indigenous major power in

357
the respective sub-regions (i.e. Japan in Northeast Asia, India in South Asia, and

Russia in Central Asia), the degrees of historical baggage, etc.

The second limitation has to do with the level-of-analysis issue. Our Domestic

Legitimation Model is essentially an elite-centric approach. Because of the

assumption that foreign policy choices are not made by the "states" but by ruling

elites of individual countries, this study has focused primarily on the perspectives,

considerations, and calculations on the part of political elites of respective countries,

examining in what way and to what extent their interpretations and reactions to

changing domestic and external conditions have led them to make certain decisions

vis-a-vis the big powers at a given time. Although this focus does not affect the

substance of our central argument, the study could be further enriched by paying more

attention to the roles of sub-national actors like business groups, social and cultural

bodies, as well as local and provincial governments in the overall development of the

respective bilateral relations. Future research may inquire into how the sub-national

linkages have had an impact on elites' foreign policy choices.

In addition to these issues, future research on smaller states' alignment choice

should also elaborate on the role of multilateral institutions as a platform for the

management of power asymmetry. In Chapters 7 and 8, this study has mentioned that

despite the differing domestic dynamics that have prompted Malaysia and Singapore

to hedge differently, the two smaller states have since the 1990s both approached the

burgeoning multilateral forums as an essential and indeed, an integral part of their

respective hedging approach vis-a-vis China. It can be argued that without the

regional multilateral institutions such as the ASEAN-China dialogue (or ASEAN Plus

One), ASEAN Regional Forum (ARF), ASEAN Plus Three (APT), and East Asia

Summit (EAS), it would be almost impossible for the smaller states to pursue their

two-pronged policies of engaging China while simultaneously ensuring the continuing

358
involvements of other big powers in regional affairs for the purpose of "dominance-

denial", as discussed.

More research, thus, should be carried out to explore the features and functions

of multilateralism as a platform for smaller states to "manage" their asymmetric

relations with the big powers. This issue is important because the way in which the

smaller states - individually or perhaps collectively - have sought to use multilateral

institutions as a shield to cushion against undesired external risks may have

ramifications not only for individual states' quest for survival, but also for the

emerging regional architecture in Asia Pacific in the twenty-first century.

3
For individual regional countries' official views of the evolving regional architecture in Asia Pacific,
see Lee Hsien Loong, Prime Minister of Singapore, "Forging a New Regional Architecture for Asia,"
The Globalist, June 29, 2006, available at http://www.theglobalist.com/storvid.aspx?StoryId=5376:
Ahmad Fuzi Haj Abdul Razak, "Reconciling ASEAN+3 Summit and East Asia Summit: Prospects for
an East Asia Community," in Stephen Leong, ed., Peace in the Pacific: Confronting the Issues (Kuala
Lumpur: Institute of Strategic and International Studies, 2007), pp. 583-591; Kevin Rudd, Prime
Minister of Australia, Keynote Address at the 8th IISS Asian Security Summit, The Shangri-La
Dialogue, Singapore, May 29, 2009; Yukio Hatoyama, Prime Minister of Japan, "Japan's New
Commitment to Asia: Toward the Realization of an East Asian Community," address delivered at the
S. Rajaratnam School of International Studies, Singapore, November 15, 2009.

359
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 CURRICULUM VITAE

Cheng-Chwee Kuik was born on July 23, 1971 in Muar, Malaysia. He grew up and
received his early education in Muar and graduated from Universiti Utara Malaysia
with a Bachelor of Public Administration in 1996. The same year he joined the faculty
of Universiti Kebangsaan (the National University of) Malaysia (UKM), a public
university located in the suburb of Kuala Lumpur, the nation's capital. He earned a
Master of Letters in International Security Studies from the University of St Andrews,
United Kingdom in September 1998, and received his PhD (with distinction) from
Johns Hopkins University's School of Advanced International Studies in June 2010.

Dr. Kuik serves as a Senior Lecturer at UKM, where he teaches theoretical courses in
International Relations and Strategic Studies at both undergraduate and graduate
levels. He is concurrently a guest lecturer at the Malaysian Defense College, the
Ministry of Defense, and the Institute of Diplomacy and Foreign Relations, the
Ministry of Foreign Affairs. He has previously held visiting research fellowship
positions at the Chinese Academy of Social Sciences, the Shanghai Institute for
International Studies, and the Lee Kong Chian Reference Library of Singapore. He
was a recipient of the British High Commissioner's Chevening Scholarship, the ASF-
Ford ASIA Fellows Award, the Fulbright Scholarship, and the Chiang Ching-kuo
Foundation Doctoral Fellowship.

Kuik researches on smaller states' alignment behavior, multilateralism, Asia Pacific

security, and Southeast Asia-China relations. His publications include: "Singapore
and Great Powers" (in Welsh et al., Impressions of the Goh Chok Tong Years in
Singapore, 2009); "China's Evolving Multilateralism in Asia" (in Calder and
Fukuyama, East Asian Multilateralism, 2008); "Multilateralism in China's ASEAN
Policy" (Contemporary Southeast Asia, April 2005); and "An Interest-based Analysis
on China's Participation in the ASEAN-led Regional Institutions" (Shijie Jingjiyu
Zhengzhi [World Economics and Politics], 2004). His article "The Essence of
Hedging: Malaysia and Singapore's Response to a Rising China" (Contemporary
Southeast Asia, August 2008) was awarded the 2009 Michael Leifer Memorial Prize,
a biennial award established by the Institute of Southeast Asian Studies (ISEAS) in
memory of the late Michael Leifer, for the best article published in one of the three
ISEAS journals.

He has been married to Gek-Hong Chua since 1996, and they have two children,
daughter Jie-Yi (b. 2002) and son Jie-En (b. 2005). They live in Selangor, Malaysia.

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